Zimbabwe’s central bank (RBZ) has banned the transacting in and trading of cryptocurrencies.The Reserve Bank of Zimbabwe has issued a directive to Zimbabwean financial institutions prohibiting them from working with Cryptocurrency exchanges or holding any accounts of people trading in cryptos.
The ban — which applies to all financial institutions — was put forth by the RBZ registrar of banking institutions, Norman Mataruka, in a circular yesterday. The reason for the move was to protect the public and safeguard the integrity and safety of the country’s financial system, he said.
The central bank has given financial institutions 60 days to end their existing relationships with cryptocurrency exchanges.
The Reserve Bank of Zimbabwe has banned virtual currencies as the financial regulators across the globe have identified the dangers and risk it possess including the high volatility of the market which may lead to a huge amount of loss. RBZ also states that it can be used for fraud, criminal activities, and money laundering and also facilitate tax funds and activities that will violate the country’s law.
Here’s the full circular issued on 11 May 2018:
CIRCULAR TO BANKING INSTITUTIONS NO. 2/2018: VIRTUAL CURRENCIES
1. Further to the Circular dated 16 November 2015 and Press Statement issued by the Reserve Bank of Zimbabwe (the Reserve Bank) on 20 December 2017 on the use of virtual currencies in Zimbabwe, banking institutions’ attention is once again drawn to the risks involved with virtual currencies and the need to ensure strict adherence to sound risk management.
2. Our investigations have revealed that the major cryptocurrency exchanges facilitating the trade of virtual currencies in Zimbabwe are Bitfinance (Private) Limited (Golix) and Styx24. Golix has gone further to set up an ATM machine through which cryptocurrency transactions are facilitated.
3. As Monetary Authorities, the Reserve Bank is the custodian of public trust and has an obligation to safeguard the integrity of payment systems. Cryptocurrencies have strong linkages and interconnectedness with standard means of payments and trading applications and rely on much of the same institutional infrastructure that serves the overall financial system.
4. Financial regulators around the world have identified the dangers and risks presented by virtual currencies to financial stability which include risk of loss due to price volatility, theft or fraud, money laundering and other criminal activities. Further, cryptocurrencies can be used to facilitate tax evasion as well as externalization of funds in violation of a country’s laws.
5. In order to safeguard the integrity, safety and soundness of the country’s financial system, and to protect the public in general, all financial institutions are hereby required to:
a. ensure that they do not use, trade, hold and/or transact in any way in virtual currencies;
b. ensure that they do not provide banking services to facilitate any person or entity in dealing with or settling virtual currencies; and
c. exit any existing relationships with virtual currency exchanges within sixty days of the date of this Circular and proceed to liquidate and restitute existing account balances.
6. For the avoidance of doubt, banking services include maintaining accounts, registering, trading, clearing, collateral arrangements, remittances, payment and settlement accounts, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of virtual currencies.
7. Be advised accordingly.
N. Mataruka Registrar of Banking Institutions May 2018
Nick Nare, a pianist, and a composer said:
“Reserve Bank Of Zimbabwe: Crypto cannot be banned… You can only ban yourself out of crypto…”
Tine Basa, a councilor candidate for Goromonzi West Ward 7 said:
“Reserve Bank of Zimbabwe’s decision to ban cryptocurrency trading is very regrettable, old school and not in tandem with what is best for the country”
Tendy263, a Twitterati said:
“The Reserve Bank of Zimbabwe has not only banned crypto currency in Zimbabwe, they have banned the future from Zimbabwe. Zimbabwe is open for old business.”
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