Reserve Bank of Zimbabwe Considers Bitcoin Illegal But No Regulation Has Been Issued


The price of bitcoin has surged in Zimbabwe over the last few weeks as the demand for a functional currency and an alternative store of value is skyrocketing.

Although the Reserve Bank of Zimbabwe (RBZ) has been lenient when it comes to cryptocurrencies so far, it has discouraged its use citing lack of a regulatory framework for exchanges and start-ups providing cryptocurrency-related financial services.

While acknowledging the benefits that digital currencies such as bitcoin can have to an economy, the Zimbabwe’s central bank said that any type of unregulated fallback should be approached with caution, even though it gives the unbanked community a sense of financial control.

In late November, however, Norman Mataruka, the RBZ director and registrar of banking institutions, stated that bitcoin was illegal, and its use would not be accepted in Zimbabwe.

“In terms of the Bitcoin, as far as we are concerned, it is not actually legal. In Southern Africa, what we have done as regulators, we have said that we will not allow this in our markets,” he remarked.

Legal and Regulatory Framework

Mr. Mataruka said that until the central bank of Zimbabwe can “actually establish and come up with a legal and regulatory framework for them, bitcoins will not be allowed” in Zimbabwe.

The RBZ director’s statements come somewhat as a surprise as Zimbabwe has a small but very active bitcoin startup scene with companies such as Golix and BitMari providing much needed alternative financial services.

Golix, a Zimbabwean digital currency exchange, has seen an influx of users and a jump in trading volumes since the start of the year while BitMari has partnered up with a local bank to provide low-cost remittance services.

The RBZ has been warning its citizens to steer clear of digital currencies such as bitcoin due to the lack of a legal and regulatory framework that can govern them in case they lose their investment.

The RBZ director’s statement comes at a time when the price of bitcoin has increased to more than $10,000 with bitcoin prices in having experienced a further surge in Zimbabwe since mid-November when the military took control of the country.

What is unclear, however, is whether the RBZ’s director’s views will be turned into regulations set by the central bank in the future or whether local bitcoin startups will be allowed to continue to operate.

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Meet Africa’s Blockchain Startups: BitMari

BitMari App

BitMari is a bitcoin wallet provider and remittance service that seeks to deploy bitcoin technology to drive financial inclusion in Zimbabwe through diaspora remittances. The company aims to assist individuals and businesses in utilising bitcoin for financial transactions and international money transfers.

Bitcoin-powered Remittance Service

BitMari LogoBitMari was founded in 2015 by entrepreneurs Sinclair Skinner and Christopher Mapondera. While doing business in Zimbabwe, the two were constantly faced with the challenge of sending money internationally. The process was time-consuming and costly. Drawing from their technical background, BitMari was conceived to bring more control to ordinary Zimbabweans when it came to sending money overseas and vice-versa.

“Our goal with BitMari is not to just ease the pain of financial dependence and economic uncertainty, we wish to bring an end to that pain by offering more monetary control to the people,” says Mapondera in an article.

By signing up for an account or using the BitMari app, you can send money in the form of bitcoin to a recipient in Zimbabwe. The money can be accessed through a mobile wallet or at any local financial institution that partners with BitMari. The app also acts as a bitcoin wallet that handles your transactions and currency conversion requirements. The company’s value proposition lies in its ability to have low remittance fees compared to other money transfer services.

According to COINFOX, the company plans to expand into regional markets in the future. Skinner said,

“Zimbabwe was selected because of its high literacy rate, high cell phone penetration, high mobile banking usage and most importantly willingness to adopt new economic systems… A 10-year-old child in Zimbabwe knows more about FOREX than most adults in Europe and U.S.”

Blockchain-based Accelerator Program for Women Farmers

In its bid to increase the popularity of bitcoin in the region, the startup partnered with the Zimbabwe Bank of Agriculture in carrying out a women farmers accelerator program. The program seeks to give women farmers a jumpstart in agriculture, by raising funds through its crowdfunding campaign to equip them with farming inputs and tools. The program will help a group of 100 farmers to develop their skills as well as utilise blockchain technology to improve farming processes and have access to financing.

The startup managed to raise $17,000 from its crowdfunding effort by November 2016 for the program. Successful farmers will be linked to international investors through smart contracts.  In addition to its philanthropic efforts in the farming sector, the company also aims to tap into agricultural remittances in the region and applied for a remittance license from the Reserve Bank of Zimbabwe earlier in the year.

With Diaspora remittances making the bulk of money transfers in the region, BitMari is zeroing in on a somewhat stable market. The challenge the company faces is cultivating trust for digital currencies, especially when competing against more traditional money transfer services like WorldRemit, which is popular in Zimbabwe.

BitMari is developing partnerships with local institutions to strengthen its remittance network. Also, having a bitcoin wallet that is secure and easy to navigate helps to gain users who are used to the convenience of mobile money platforms. For Zimbabweans living in a world of volatile exchange rate fluctuations and financial uncertainty, digital currency might just be the option they need.

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