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Reserve Bank of Zimbabwe Bans Cryptocurrency Trading, Financial Institutions Given 60 Days to Comply

· May 12, 2018 · 8:00 pm

The financial services regulator for the southern African country of Zimbabwe – the Reserve Bank of Zimbabwe (RBZ) – has banned all financial services institutions in the country from all forms of cryptocurrency trading. The directive was shared in a circular on virtual currencies distributed to all institutions on Friday.


Cryptocurrency Trading Banned Through Banking Services

According to a news report, the circular which was signed by the RBZ registrar of banking institutions Norman Mataruka, the central bank has said that it is taking these measures to protect the public and safeguard the integrity, safety, and soundness of the country’s financial system.

All financial institutions in Zimbabwe which include commercial banks and mobile money service providers have been told to ensure to not use, trade, hold or transact in virtual currencies or provide banking services that would facilitate any individual or entity in dealing with or settling cryptocurrencies.

The ban outlined a swathe of services that include maintaining accounts, registering, trading, clearing, collateral arrangements, remittances, payment and settlement accounts, giving loans against tokens, accepting tokens as collateral, opening accounts of cryptocurrencies exchanges and moving money in accounts relating to cryptocurrency trading.

The RBZ has also directed banks to terminate any existing relationships with virtual currency exchanges in sixty days to liquidate existing account balances.

Zimbabwe does not recognize cryptocurrencies as legal tender and the country does not have a regulatory framework for virtual currencies or cryptocurrency trading. However, it has managed to effect a ban by directing financial institutions to keep their hands off all transaction and services related to cryptocurrencies.

Cryptocurrency Trading Banned Through Banking Services

Exercising Caution and Choking an Industry at the Same Time

The stance that has been taken by Zimbabwe’s central bank isn’t new. The cryptocurrencies space is still facing a lot of scrutiny and regulators in other markets have taken a cautious approach, pushed by concerns around money laundering, tax evasion, fraud and in cases like Zimbabwe, the externalization of foreign currency in response to the country’s foreign currency challenges.

Countries like India and China have explored this route before and in Africa, Kenya’s regulator has also taken a hard stance against cryptocurrencies. They are all meant to be measures against potential risks in a new space.

However, such moves also have a negative impact on legal service providers including entities that solve some problems that affect the economy.

In Zimbabwe, a number of businesses that have emerged in this space over the past few years that include the local cryptocurrency exchanges like Golix as well as outfits that have been using cryptocurrencies to facilitate remittances such as Bitmari will be affected by the directive.

Do you think that regulators that put restrictions on cryptocurrency activities because of the risk of crimes like money laundering are justified? Please let us know in the comments below. 


Image courtesy of AAAB, Shutterstock

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Zimbabwe Banks Lack Cash Reserves To Honor Customer Withdrawals

Source: bitcoin

Bitcoinist_Zimbabwe

The country of Zimbabwe is not associated with financial stability by any means, yet things have taken a turn for the worse. Now that cash supplies are nearly non-existent, banks have to turn customers away. An excellent breeding ground for Bitcoin adoption, or will a different solution save the country?

Also read: Industry Report: Dr. Satoshi, BitPay Launches Bitcoin Debit Card

Zimbabwe Runs Out Cash

Even though various countries around the world are contemplating to go cashless in the future, running out of cash is not what most of them have envisioned. Unfortunately for Zimbabwe, that is exactly what happened. Not that this is a complete surprise, mind you, as the country has been using various foreign currencies since the collapse of their own fiat currency in 2009.

Especially the US Dollar has been a focal point for Zimbabwe, but due to their slump in global commodity prices and lower exports, not enough funds is coming in. As a result, local banks have started to turn away customers looking to withdraw cash, simply because they have no reserves to meet the demand.

For the time being, the central bank is looking to print bond notes, which would be tied to the US Dollar value kept in the country’s reserves. Moreover, withdrawals will be limited to US$1,000 per day, and people are advised to use either Euros or South African rand. That latter is not a viable option either, though, considering the rand lost 20% of its value compared to the US Dollar in the past twelve months.

This goes to show that central banks cannot continue to create money out of thin air to solve their financial problems. Yet that is exactly what the Zimbabwe central bank is doing, as they issue a brand new currency to temporarily alleviate some of the financial pressure. At the same time, they limit how much of it can be used by consumers on a daily basis, though, which will not help stabilize the economy in the long run.

Bitcoin could resolve these financial issues as well, although there is no guarantee consumers and enterprises see the value of this cryptocurrency just yet. Solving a financial crisis does not happen overnight, but Bitcoin is ready to be embraced by Zimbabwe if they want to offer consumers a financial ecosystem that is not bogged down by central bank dominance.

What are your thoughts on the situation in Zimbabwe? Let us know in the comments below!

Source: CNN Money

Images courtesy of Shutterstock, Wikipedia

The post Zimbabwe Banks Lack Cash Reserves To Honor Customer Withdrawals appeared first on Bitcoinist.net.

Zimbabwe Banks Lack Cash Reserves To Honor Customer Withdrawals

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