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Golix Shelves ICO and Takes Reserve Bank of Zimbabwe to Court Over Cryptocurrency Ban

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Zimbabwe Cryptocurrency Ban

Following the directive by the Reserve Bank of Zimbabwe (RBZ) to ban cryptocurrency, one of the largest cryptocurrency exchange in Zimbabwe, Golix, has now gone to court challenging the directive by Zimbabwe’s central bank after it was forced to shelve its token sale, which was scheduled to start on May 14. and was asked to cease operations by the central bank.

Golix informed Bitcoin Africa on May 15 that it has decided to suspend its planned ICO due to the RBZ’s new directive, which is effectively forcing them to shut down its operation by preventing banks from dealing with cryptocurrency startups. Moreover, as reported by TechZim, the central bank also reached out to Golix directly, in the week to follow the directive announcement, informing them that they are required to cease operations entirely.

Aside from warning the general public to keep away from decentralised digital currencies, RBZ sent a directive to all banks on May 11, 2018, giving them a maximum of 60 days to end any relationships they may have with cryptocurrency exchanges. Several bank accounts belonging to Golix have already been closed.

The circular, which was issued by the Registrar of Banking Institutions in Zimbabwe, N. Mataruka, lists Golix and Styx24 as the country’s cryptocurrency exchanges. In the circular, one of the reasons RBZ gave regarding the ban was that they wanted to be able to “safeguard the integrity, safety and soundness of the country’s financial system, and to protect the public in general”.

Golix is Fighting Back

Golix Launches ICOGolix will not go out without a fight. Golix has presented the High Court of Zimbabwe with three arguments on why the ban of cryptocurrency in the country is not just. In their first argument, Golix questioned whether the RBZ has any legal authority to ban cryptocurrencies. In their explanation, Golix detailed how they had severally met the RBZ including a day before the circular was released. According to their first argument, RBZ has no authority over Golix and neither have they, in their engagements, ever shown or behaved in a manner that indicated so.

Golix’s second argument terms RBZ’s directive as unfair based on the legal principle of administrative justice as the central bank of Zimbabwe neither gave reasonable notice nor the right of response. This, according to Golix’s argument, means the RBZ breached the right to Administrative Justice considering that by statue, RBZ is an administrative body.

A quote from the second argument by Golix as shared by Techzim states:

“Applicant was never advised prior to the ban that it will be implemented even though Respondents had ample opportunity to advise Applicant of same. As aforesaid, the last meeting between the parties was held on 11 May 2018. Four officials from the Applicant including myself attended the meeting while fifteen officers, including the Registrar of Banking Institutions represented the Respondents. In that meeting, the discussions were more of Respondents wanting to learn and understand the technology behind our business and our business model. The impression we got was that Respondents wanted to understand in order to begin working on regulation. No mention was made of any impending ban on our business”.

Unconstitutional Ban

According to Golix’s third argument, the ban by the RBZ is unconstitutional. Golix sited Section 68 of the constitution by saying: “Section 68 of the Constitution requires that administrative action be lawful, reasonable, proportionate and procedurally fair. I humbly submit that Respondents’ actions fell short of the standard required in the Constitution”.

In their defense, they give reasons as to why the view the directive as unconstitutional as:

“First, the press statement issued by 1st Respondent does not state the purpose for which the ban was imposed. The reason why it was necessary to impose the ban is not stated in the press statement. We can only speculate as to why the ban was imposed. In the absence of a clear reason for the imposition of the ban, it is really difficult to assess the proportionality of 1st Respondent’s decision vis-a –vis the goal it was intended to achieve. Nonetheless, even in the absence of a clear reason for the ban, it is not difficult to see that the decision is disproportionate”.

Following the directive, Golix issued a statement via their blog notifying its customers that unless RBZ changed its position before the 60-day window period given, they “will not be able to send or receive fiat currencies for cryptocurrency trades”.

While the High Court of Zimbabwe will determine the fate of the case between Golix and RBZ, the move by Zimbabwe’s central bank to ban cryptocurrencies is a clear indication of how most African states are yet to embrace digital currencies such as bitcoin. And while we cannot speculate on the ruling that the court will make, this move could slow down the adoption of cryptocurrencies in other African markets.

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Ghana’s Securities Exchange Commission (SEC) Warns Public About Investing in Crypto

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In a recent statement, the SEC of Ghana has warned the populace against investing in cryptocurrency and crypto-related investment schemes. This warning comes amidst a growing concern of the Security and Exchange Commission (SEC) about how Ghanaians are diving head first into the cryptocurrency market.

SEC Warns About Crypto

The Director General of the SEC, Rev. Daniel Ogbarmey Tetteh, signed an official statement released by the Commission that cautions the general public about cryptocurrency trading and all crypto-related activities as these are not regulated by the Securities Exchange Commission reports News Ghana

“[Cryptocurrency investments] offered by unregistered and unlicensed entities on digital online trading platforms with promises of high returns on investment are not sanctioned nor registered by the SEC”, the statement read.

The Commission’s statement further read:

Ghana SEC“The SEC wishes to inform the general and investing public that none of these cryptocurrencies is recognised as currency or legal tender in Ghana. The platform on which they are traded are not also licensed nor regulated by the SEC. The SEC would like to make it clear that it does not currently regulate these types of products offerings and their accompanying online trading platforms or Exchanges. Members of the general public who are investing or intend to invest in such currencies or assets may be doing so at their own risk and can in no way be protected under the Securities law regime in Ghana.”

Currently, digital asset trading remains a regulatory and legal grey area in the West African nation. Whereas the SEC has stated that it is presently not in support of or regulating cryptocurrencies, it also has not stated that cryptocurrency trading is illegal.

The regulator only mentions that they are “unregistered, unlicensed, and unregulated under the Securities Law of Ghana“. Thus, this can be very much regarded as a “disclaimer” on the part of the regulatory body to the public to sensitise them that trading in cryptocurrencies in the country presently is only done at one’s own risk.

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Botswana Receives its First Bitcoin ATM

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Botswana Bitcoin ATM

A startup in Botswana recently launched the country’s first bitcoin ATM in a shopping mall in the country’s capital Gaborone.

Botswana’s First Bitcoin ATM

Botswana Bitcoin ATMAccording to a report by Business Times, the new bitcoin teller machine, which is Africa’s tenth bitcoin ATM, is located in Gaborone’s city centre in a large shopping mall.

The company hopes that its bitcoin ATM will gradually increase the use of cryptocurrency in the city. Also, given the many negative stories surrounding cryptocurrencies, transactions without human interactions could be an attractive option to potential customers.

“We have been working tirelessly to make it easier for Batswana [people of Botswana] to buy cryptocurrencies and now we are bringing simplicity, convenience, and trust to the cryptocurrency purchasing experience,” said Express Minds’ Director Brose Watlala.

Mr. Watlala further states that the machine has a maximum daily transaction limit of around $5,000 and is the fastest, most convenient way to currently buy bitcoin in Botswana. Since there are no local cryptocurrency exchanges in the country, the local bitcoin community will likely benefit from the new bitcoin ATM.

The Future of Bitcoin ATMs

Botswana‘s government has paid negligible attention to digital currencies with its central bank not having made any official comments on cryptoassets or the blockchain. Currently, there are no clear rules and regulations around the legality of bitcoin and other crypoassets in the African nation. That means that the new bitcoin ATM may or may not last a long time should the country’s regulatory position towards bitcoin change.

As for now though, Express Minds use their newly launched bitcoin ATM to teach more people about bitcoin and the crypto world, which could go a long way in helping the country’s progress in crypto adoption.

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Kenya’s Regulatory Sandbox Will Not Accommodate Cryptocurrency Firms Says CMA

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Regulatory Sandbox in Kenya

Kenya’s financial regulator, the Capital Markets Authority (CMA), announced that the new regulatory sandbox will not accommodate blockchain firms dealing in cryptocurrencies.

The Regulatory Sandbox in Kenya

“[…] Blockchain firms will be considered so long as they are not dealing with cryptocurrencies since the CMA’s mandate does not extend to currency. The CMA regulatory sandbox can only serve financial innovations that are directly within the regulatory perimeter of the CMA.” said the Capital Markets Authority’s chief executive Paul Muthaura, according to a report by BusinessDailyAfrica.

CMA

The new regulatory sandbox aims to offer a controlled environment for fintech firms to innovate and create financial products that protect the interests of consumers.

The regulatory sandbox has so far received interest from 70 firms that want to join. Most of these firms are in the payments sector while others are crowdfunding platforms in the real estate and health sectors. In addition, some of these firms are from outside Kenya.

The CMA recently held a validation exercise with the 70 firms of the opinions received from the public regarding the new laws guiding the sandbox. Before this, the regulator had requested for public feedback regarding the sandbox’s regulations.

In April, the Authority will issue the final guidance notice to anchor the regulations into law before officially launching the sandbox in May.

An Anti-Crypto Regulatory Space

In the past, the Capital Markets Authority and the Central Bank of Kenya (CBK) have warned Kenyans to avoid participating in initial coin offerings (ICOs) and trading in cryptocurrencies respectively. These warnings were issued because investing in ICOs and cryptocurrencies poses a high risk to consumers.

“There are risks associated with cryptocurrency particularly on consumer protection, fraud, hacking and loss of data and they are prone to be used as pyramid schemes,” the CBK governor, Dr. Patrick Njoroge asserted in 2018

In one of its 2018 soundness reports, the CMA recommended that a special body be created to oversee cryptocurrencies and ICOs. The report stated: “There is a need for regulators to devise a common approach towards handling issues revolving around cryptocurrencies and ICOs. A joint workgroup by financial sector regulators could be put in place to tackle issues around cryptocurrencies and ICOs.”

In light of the upcoming regulatory sandbox, Kenyans could benefit from the platform since the market is currently flooded with fintech solutions, especially those in the mobile lending sector, which are high-risk.

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