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Zimbabwe hints at stricter cryptocurrency control

Zimbabwe Reserve Bank executive announces proposal for a regulatory sandbox.
Zimbabwe Reserve Bank executive announces proposal for a regulatory sandbox.

Coinciding with the recent slump in the market value of cryptocurrencies, Zimbabwe has hinted at fresh regulation to force cryptocurrency companies to meet requirements to operate in the country.

At a recent economic forum, the deputy director, financial markets and national payment systems at the Reserve Bank of Zimbabwe (RBZ) Josephat Mutepfa announced that authorities are considering a regulatory sandbox to help assess the operational structures of cryptocurrency companies.

Mutepfa noted that participants in the sandbox would have the option to either operate as a standalone with an existing product, partner with a bank or a mobile money platform or be registered as a microfinance company.

The options all point to capitalisation which, according to Mutepfa, represents an ongoing challenge to the youth who are the majority within the cryptocurrency market.

Mutepfa made the announcement as Bitcoin found itself caught up in a sell-off triggered by the Coronavirus outbreak that plunged global stock markets into record lows.

The top cryptocurrency has to date lost more than 50% of its recent price to fall below the US$5000 range - losing about US$40-billion over a 24-hour period on 12 March to make it its worst one-day sell-off in seven years.

The flight to cash triggered debate over Bitcoin’s safety and storage value attributes, considering it was purportedly created to mitigate against an economic crisis.

Despite speculation that Zimbabwe would be one of the first to embrace the use of cryptocurrencies like Bitcoin on a large scale due to its economic challenges, the government has never endorsed the idea.

Rather, on several occasions, it warned citizens against the use of these emerging assets especially as they are unregulated by central financial bodies.

While it remains to be seen what form the proposed regulatory sandbox would take and the impact it will have on crypto-related businesses and the economy in Zimbabwe, the co-founder of Bitmari, a pan-African remittance service leveraging the Bitcoin technology, Sinclair Skinner is optimistic of a positive outcome.

“Zimbabwe's currency policy has always been one of the most innovative and progressive in the world. In 2017, the RBZ issued the first remittance license in the world to explicitly use Bitcoin to remit cross border cash. Whatever decision will be made, as a Bitcoin pioneer, I am very confident it will be in the best interest of the Zimbabwean people,” said Skinner.

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