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.