On May 11, 2018, the Central Bank of Zimbabwe banned the trade, possession, and transfer of the popular digital currency bitcoin. The news came as a shock to the citizens of the country as their economy is currently suffering from super high inflation. Although the ban in the small country won’t have any impact on the world of crypto trading, yet, it will force its citizens into the traditional economy where even buying a piece of bread has become a state of concern.
The Reserve Bank of Zimbabwe has also asked financial institutions to cease any service provided to bitcoin-related businesses. The premium authority has given a 60-day window to the financial institutions to settle their business in the field of digital currency.
In a circular, Chief Registrar RBZ, Norman Mataruka, said, “As monetary authorities, the Reserve Bank of Zimbabwe is the custodian of public trust and has an obligation to safeguard the integrity of payment systems.”
The circular further stated that RBZ’s decision had been backed by public interest to secure the morality of Zimbabwe’s sound financial system. Mataruka informed that banks should use the 60 days window to settle any collateral arrangements, trading, registrations, loans taken against virtual coins and remittances.
He claimed that traditional banking models and digital currencies have a lot in common as they aim to assist their trading and payment platform through the financial system of the country.
John Mangudya, governer central bank, said, “The Reserve Bank of Zimbabwe has not “authorized or licensed any person or entity or exchange for the issuance, sale, purchase, exchange or investment in any virtual currencies/coins/tokens in Zimbabwe. Exchanges such as Bitfinance (Private) Limited, (Golix) and Styx24 are not licensed or regulated by the Reserve Bank.”
Last month, a notice was released by the Central Bank of Kenya about the risks associated with digital trading like hacking and fraud.
Zimbabwe was among the first countries to adopt bitcoin which provided health benefits to the country, as it was less volatile than the fiat currency which was under severe stress. Gradually, superior authorities became skeptical of cyber coins as they were returning power in the hands of the average person.
When bitcoin reached its zenith in December 2017, it was bringing more profit to the small country in comparison to the rest of the world. While the world was enjoying the fruits of bitcoin reaching $20,000, the citizens of Zimbabwe were looking at its price touching the $30,000 mark in the local exchanges.
Bitcoin has been acknowledged as a tool to escape the political and economic turmoil of the country, but now after the government’s new decision, the citizens of Zimbabwe will not be able to enjoy financial freedom. According to experts, the crypto space of Zimbabwe is a lot safer than most of the countries around the world, but it will have no value if financial institutions won’t be able to use them any longer. The outcomes of the ban are still to be noticed, but they will most likely be negative and remove a ray of hope among the commoners.