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Zimbabwe faces cryptocurrency challenge

by Staff Reporter
24 Dec 2017 at 07:14hrs | Views
LOCAL banks acknowledge the rise in crypto-currencies and the potential threat it has on the traditional banking system, but still cannot measure the extent of market share it has "stolen" as it remains illegal in the country.

This comes as more punters in the country are turning to the cryptos following the acute cash shortages that hit the country since early last year and their relatively cheaper transaction fees as well as supposed anonymity with transactions done on the internet and across borders.

Bankers' Association of Zimbabwe (BAZ) president Dr Charity Jinya said the industry was unfazed with the existence of the cryptos such as bitcoin as it is illegal, although it is proving popular in the country.

"We stand by what the Governor (Dr Mangudya) said about this. It is illegal," she said in an interview on the sidelines of the Indian Embassy and Ministry of Industry, Commerce and Enterprise Development event held in Harare last week.

"The likes of bitcoin exist and people are beginning to use it and we know it. But at this point it is difficult to measure the level of threat it may pose or how much we have lost to it because there is no legal framework governing it. It is also virtual," said Dr Jinya.

Crypto-currency is a digital asset designed to work as a medium of exchange that uses cryptograpghy to secure its transactions, to control the creation of additional units and verify the transfer of assets.

The first crypto-currency to be decentralised is Bitcoin. Bitcoin, together with others, Ethereum and Lightcoin, have seen unprecedented growth in 2017 but remain volatile.

In Zimbabwe, speculation had been rife surrounding the trading of crypto-currencies with fears this could be a pyramid scheme and potential investors afraid of losing.

However, fortune punters around the world, Zimbabwe included, have turned to Bitcoin on the back of its quick returns.

As of last Wednesday, Bitcoin was trading at $16 770 at Coinbase and $29 000 at Golix, which is currently the biggest crypto-currency exchange in Zimbabwe.

Dr Jinya said Zimbabwe was also looking at how other countries have managed the use of crypto-currencies, its trade and the legal framework.

"We also learn from other countries how they have managed over the years," she said.

The Reserve Bank of Zimbabwe (RBZ) has also maintained trading in the crypto-currencies or virtual currencies remain unregulated and presents risks such as money laundering, terrorism financing and tax evasion.

"Under the existing legal and regulatory dispensation, any person who invests in virtual currencies or participates in any transaction involving virtual currencies does so at own risk and will not have legal protection from, or recourse against, any regulatory authority.

"Virtual currencies are not only unregulated but are also neither issued by public authority nor guaranteed by the State. Virtual currencies do not have legal tender status in Zimbabwe or in any jurisdiction in the world," said RBZ.


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