Zimbabwe may finally be relaxing its hardball stance on cryptocurrencies. Its increasingly crypto-friendly finance minister Mthuli Ncube, recently said that at this point, it would be impossible for the nation to keep ignoring cryptocurrencies.
According to a report by the Herald, Ncube believes that cryptocurrencies will be better served as an investment class instrument rather than as legal tender. This position suggests that the Victoria falls stock exchange platform could list crypto-based products in the near future.
Zimbabwe Government And Crypto
In 2017, the Central Bank of Zimbabwe issued a statement making clear its stance on cryptocurrency use within the nation. It stated that Bitcoin and other currencies were not legal tender and therefore should not be treated as such. Virtual currencies are not regulated by Zimbabwe’s laws, claimed the apex bank. And as such, they run the risk of becoming enablers for money laundering, fraud, tax evasion, and even terror financing.
The central bank followed this up by instructing all banks under its purview to cease all transactions relating to digital currencies. These include holding, trading, or transacting in these currencies or providing services to entities dealing in such currencies.
Total crypto market at $2.49 Trillion | Source: Crypto Total Market Cap from TradingView.com
Interestingly, Minister Ncube’s recent statements may be a shift in attitude towards digital currencies by the Zimbabwean government. The minister seems to be advocating for his government and others to take advantage of the benefits of blockchain technology. That is, without ceding economic control.
With commission fees for all remittances by Zimbabweans living abroad being as high as 20%, the use of disruptive technology like blockchain could significantly bring down these costs. Thereby increasing the value of remittances to the Zimbabwean economy from its current 7%.
Related Reading | Zimbabwe Finally Decides to Regulate Cryptocurrency
The minister has hinted that the Zimbabwean government has begun the process of regulating digital currencies. The government has already created a framework that will serve as a regulatory sandbox where cryptocurrency use in the country can be tested in a controlled environment.
Crypto Adoption In African Countries
The adoption of cryptocurrencies in Africa is at an all-time high. The value of cryptocurrencies between July 2020 and June 2021 rose by 1,200% at $105.6 billion, according to the Chainalysis Geography of Cryptocurrency report. This growth could be a result of a few factors. The devaluation of fiat currencies in comparison to cryptocurrencies which has seen significant growth prompts citizens to seek more protection for their money. The ease of cross-border transactions also serves as a contributing factor to the adoption of cryptocurrencies. Remittance to African countries can be completed in seconds as compared to days whilst using traditional banks at a fraction of the commission cost.
While the adoption of these currencies is on a rise, African Governments generally do not share the enthusiasm of their citizens. A handful of them have even chosen to ban crypto altogether. Nigeria, Kenya, Morocco, Algeria, and others have issued warnings to their citizens and financial institutions to desist from engaging in digital currency trading and transactions.
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