The Reserve Bank of Zimbabwe banned local banks from processing payments related to cryptocurrencies, Governor John Panonetsa Mangudya announced on Monday. However, the central bank did not officially stop local crypto exchanges from providing their services.
In Zimbabwe, people who trade Bitcoin say they consider it a safe-haven asset given that their bank deposits in fiat currency drop in value each day. Others say that they like Bitcoin because it let them shop online or fund family members who study abroad. Note that the Zimbabwe dollar was demonetized in 2015 after a period of hyperinflation. Instead, people use currencies like South African rand, pound sterling, US dollar, Japanese Yen, and euro.
The local exchanges tend to sell Bitcoin at a much higher rate than that displayed on Coinmarketcap. For example, as of Monday, Golix.com, the larger of the two crypto platforms, was selling one Bitcoin at around $12,400, while on Coinmarketcap it has fluctuated from $8,300 to $8,700 for the same period. In Zimbabwe, the Bitcoin rate has been higher on several other occasions.
The central bank’s governor said that the regulator has not licensed anyone to trade in cryptocurrency and that investors are not protected by the law.
“The Reserve Bank has directed all banking institutions not to provide banking services to facilitate any person or entity in dealing with or settling virtual currencies,” Mangudya stated.
“The nature of cryptocurrency transactions make them the currency of choice for money launderers and other criminals,” he added.
Golix and Styx24.com, the country’s smaller crypto exchange, didn’t comment on the bank’s move.
The fifth article of central bank’s circular says:
“In order to safeguard the integrity, safety and soundness of the country’s financial system, and to protect the public in general, all financial institutions are hereby required to:
- a. ensure that they do not use, trade, hold and/or transact in any way in virtual currencies;
- b. ensure that they do not provide banking services to facilitate any person or entity in dealing with or settling virtual currencies; and
- c. exit any existing relationships with virtual currency exchanges within sixty days of the date of this Circular and proceed to liquidate and restitute existing account balances.”
Reuters cited an insider who tracks cryptocurrencies in Zimbabwe, saying that the central bank’s decision would impact the settlement between exchanges alone, while peer-to-peer trading won’t be affected.
“We can sit over a cup of coffee and transfer cryptos among ourselves. The entire logic of crypto is peer to peer transaction without trusted third parties,” the source said. He chose to stay anonymous as he was not authorized to speak to the press.
This article appeared first on Cryptovest
