Zimbabwe is taking a pivotal step towards embracing cryptocurrency by working on its inaugural set of crypto regulations, marking a notable shift from the Reserve Bank of Zimbabwe’s (RBZ) 2018 decision to prohibit banks from engaging in cryptocurrency transactions.
In a move to establish a regulatory framework for the crypto industry, the government’s National Risk Assessment Coordination Committee (NRACC) initiated consultations with key stakeholders in the crypto community in May 2024. These discussions, aimed at shaping the future of cryptocurrency regulation in Zimbabwe, concluded in June.
The anticipated regulations, which could potentially include the issuance of licenses to crypto exchanges, are seen as a means to legitimize the burgeoning industry.
In response to the government’s initiative, individuals with knowledge of the situation have revealed that crypto entities have been encouraged to form advocacy groups. This strategy is aimed at facilitating direct communication with regulators, thereby simplifying the process of developing scalable products within a legal framework, as opposed to circumventing existing laws due to the absence of supportive regulations. Vusa Chimanikire, the founder of fintech startup Entry, highlighted the importance of this direct engagement with regulators.
Zimbabwe’s tumultuous currency history has driven its citizens towards alternative financial solutions, including international crypto exchanges like Binance and Coinbase, as well as local platforms such as Golix. The government now seeks to rectify the previous oversight of allowing crypto exchanges to operate without regulation prior to the 2018 ban, an approach that resulted in financial losses for many Zimbabweans.
Stakeholders in the crypto industry emphasize the necessity of licensing crypto asset service providers (CASPs), which hinges on the recognition of cryptocurrency as a financial asset.
Since the 2018 ban, crypto-related businesses have faced challenges in accessing banking services, resorting to payment providers like PayPal and Payoneer for financial transactions. The inability to open bank accounts has significantly hindered the operational capabilities of these businesses, with one founder of a Telegram-based crypto trading platform lamenting the severe implications of this restriction.
The absence of regulation has also led to the proliferation of underground speculative trading and crypto pyramid schemes. A notable incident in May 2024 involved Dr. Solomon Guramatunhu, a renowned Zimbabwean ophthalmologist, losing over $100,000 in a crypto scam.
The negative perception of cryptocurrency, fueled by scams and the lack of recourse for victims, has underscored the need for a regulatory framework to restore trust in the crypto market.
Licensing would not only facilitate safer transactions by connecting users with verified intermediaries but also enhance competition in the peer-to-peer transaction space, currently dominated by mobile money, cash transactions, and bank transfers, according to market research analyst Valentine Muhampa.
For Zimbabwe’s crypto community, the establishment of a regulatory framework represents a significant shift from the industry’s previous “Wild West” image. As they await the finalization of these regulations, there is a sense of cautious optimism for the future of cryptocurrency in Zimbabwe.
