Zimbabwe's government may be one step closer to adopting crypto
Zimbabwe may finally be loosening its hardline 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 ignoring cryptocurrencies.
According to a report in the Herald, Ncube believes that cryptocurrencies will serve better as an investment grade instrument than as legal tender. The post 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 clearly stating its position on the use of cryptocurrencies in the country. It stated that Bitcoin and other currencies are not legal tender and therefore should not be treated as such. Virtual currencies are not regulated by Zimbabwean law, the apex bank claimed. As such, they risk becoming enablers for money laundering, fraud, tax evasion and even terrorist financing.
The central bank has followed suit by instructing all banks under its authority to cease all transactions related to digital currencies. These include holding, trading or transacting in these currencies or providing services to entities dealing with such currencies.
Interestingly, recent statements by Minister Ncube may be a shift in the Zimbabwean government's attitude towards digital currencies. The minister appears to be urging his government and others to embrace the benefits of blockchain technology. That is, without surrendering economic control.
As commissions for all remittances from Zimbabweans living abroad are as high as 20%, the use of disruptive technology such as blockchain could significantly reduce 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 where the use of cryptocurrency in the country can be tested in a controlled environment.
Crypto adoption in African countries
Cryptocurrency adoption in Africa is at an all-time high. 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 growth can be attributed to several factors. The devaluation of fiat currencies compared to cryptocurrencies, which has seen significant growth, is driving citizens to seek greater protection for their money. The ease of cross-border transactions is also a contributing factor to the adoption of cryptocurrencies. Transfers to African countries can be completed in seconds compared to days when using traditional banks for a fraction of the cost of commissions.
While the adoption of these currencies is growing, African governments generally do not share the enthusiasm of their citizens. Several have even decided to ban cryptocurrencies altogether. Nigeria, Kenya, Morocco, Algeria and others have warned their citizens and financial institutions not to engage in digital currency trading and transactions.
19-10-2021, Mr Advice TEAM