Zimbabwe can finally relax its tough stance on cryptocurrencies. Its increasingly cryptocurrency-friendly Finance Minister, Mthuli Ncube, recently said that at this point the nation would not be able to continue to ignore cryptocurrencies.
According to a Herald report, Ncube believes that cryptocurrencies will serve better as an investment grade instrument than as legal tender. This position suggests that the Victoria Falls exchange platform may exchange cryptocurrency-based products in the near future.
In 2017, the Central Bank of Zimbabwe issued a statement in which it clearly stated its position on the use of cryptocurrencies in the country. Bitcoin and other currencies have been found not to be legal tender and therefore should not be considered as such. Virtual currencies are not regulated by Zimbabwean law, the apex bank said. As such, they risk becoming money laundering, fraud, tax evasion and even terrorist financing agents.
The central bank followed suit by instructing all banks under its responsibility to stop all transactions involving digital currencies. These include the possession, trading or transactions in those currencies or the provision of services to entities dealing in such currencies.
Interestingly, recent statements by Minister Ncube may be a change in the attitude of the Zimbabwean government towards digital currencies. The minister seems to be urging his government and others to take advantage of blockchain technology. That is, without giving up economic control.
Since commissions for all transfers from Zimbabwe living abroad are as high as 20%, using a breakthrough technology such as blockchain can significantly lower these costs. Thus increasing the value of remittances to the Zimbabwean economy from the current 7%.
The minister hinted that the Zimbabwean government has started the process of regulating digital currencies. The government has already created a framework that will serve as a regulatory sandbox in which the use of cryptocurrency domestically can be tested in a controlled environment.
Crypto adoption in African countries
Cryptocurrency adoption in Africa is at the highest level. The value of cryptocurrency transactions between July 2020 and June 2021 increased by 1,200% to $ 105.6 billion, according to the Chainalysis Geography of Cryptocurrency report. This increase may be due to several factors. The devaluation of fiat currencies versus cryptocurrencies, which has seen significant growth, is prompting citizens to seek greater protection for their money. The ease of cross-border transactions is also a contributing factor to the adoption of cryptocurrencies. Transfer to African countries can be made in seconds compared to days when using traditional banks for a fraction of the commission cost.
While the adoption of these currencies is increasing, African governments generally do not share the enthusiasm of their citizens. Several of them have even decided to ban cryptocurrencies entirely. Nigeria, Kenya, Morocco, Algeria and other countries have warned their citizens and financial institutions not to engage in digital currency trading and transactions.
19-10-2021, Mr Advice TEAM