Zimbabwe’s banks not ready for cryptocurrency

Cryptocurrency, digital tokens, non-fungible tokens, and code, form part of the many virtual assets available on the market.

ZIMBABWEAN banks are not yet equipped to fully adopt and facilitate cryptocurrency trading despite regulators drafting a framework to see its trading in the local market.

At the recent inaugural Capital Markets Conference in Nyanga it was revealed that the Securities and Exchange Commission of Zimbabwe (SecZim) and Reserve Bank of Zimbabwe (RBZ) are working on a framework to allow for the trading of virtual assets.

Virtual assets relate to a digital representation of values that can be digitally traded, or transferred, and can be used for payment or investment purposes.

Cryptocurrency, digital tokens, non-fungible tokens, and code, form part of the many virtual assets available on the market.

In the past, the RBZ has banned the usage of cryptocurrencies in the market, with the regulator only revisiting its usage now owing to the market growing to a US$2,42 trillion valuation globally.

 Bankers Association of Zimbabwe chief executive officer Fanwell Mutogo said the banks were not yet ready to fully embrace cryptocurrency trading and investment services.   

“Zimbabwean banks are not yet poised to fully embrace crypto currency trading as this is still a new development which is still undergoing research,” Mutogo said.

He said the central bank had shown some interest in the technology, having introduced a gold-backed digital token.

It was reported in April that RBZ governor John Mushayavanhu had considered cryptocurrency as a potential local tender before settling for the Zimbabwe Gold ( ZiG), currency.

“There have been some developments where the central bank has shown interest in digital currencies through the introduction of gold backed digital tokens,” Mutogo said.

“Gold-backed tokens have a clear backing (physical gold), whereas cryptocurrencies rely on network consensus and cryptographic security and examples of crypto currencies are Bitcoin or Ethereum.”

Financial analyst Ranga Makwata said the potential for widespread cryptocurrency adoption in Zimbabwe was significant as the country continues to grapple with the instability of its central bank-controlled currencies.

Makwata said that with a history of hyperinflation and economic turmoil, Zimbabweans saw cryptocurrencies as a worthwhile alternative.

“Many will see crypto as a worthwhile alternative, which is not prone to waves of hyperinflation unlike what we have seen with the local currency,” he said.

“Factors such as economic instability, a high interest in digital currencies, a tech savvy youthful population, and the need for efficient remittances are all supportive of quick adoption of digital currencies like crypto.”

Makwata said regulatory uncertainty, limited infrastructure, and low financial literacy around cryptocurrencies posed challenges to full-scale adoption.

He urged the RBZ and SecZim to establish a clear and supportive regulatory framework to unlock the potential of cryptocurrencies in the country.

“This framework should provide legal certainty, consumer protection, and guidelines for legitimate use of virtual assets,” Makwata said.

“Increasing public financial literacy especially targeting early tech adopters such as youth, developing robust digital and financial infrastructure, fostering collaboration between traditional financial institutions and crypto currency platforms, and implementing strong cybersecurity measures are also crucial steps.”

He added: “By addressing these elements and effectively regulating the virtual assets space, Zimbabwe can harness the benefits of cryptocurrencies for economic growth, financial inclusion, and technological innovation.”

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