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Zimbabwe’s Central Bank Bans Financial Institutions from Dealing with Cryptocurrencies

The Reserve Bank of Zimbabwe (RBZ), Zimbabwe’s Central Bank, has recently banned the domestic financial institution from dealing with digital currencies in a bid to protect the public and safeguard Zimbabwe financial system, as local news outlet NewsDay published on Saturday.

According to the report, the RBZ Director and Registrar of banking institutions, Norman Mataruka, announced the move through a circular that instructed financial institutions to halt any existing relationships with crypto exchanges within 60 days, and subsequently liquidate existing crypto related accounts.

NewsDay further reported that the circular included blow-by-blow of what the RBZ considers “banking services,” presumably to avoid seeing crypto exchanges or financial institutions take advantage of potential loopholes. Per the circular, the director ordered the financial institutions to ensure both individuals and businesses to not “use, trade, hold and/or transact in any way in virtual currencies”. Accepting Virtual currencies as collateral, or opening accounts in any way related to Virtual currencies is also banned.

Explaining the move, RBZ director commented:

As monetary authorities, the Reserve Bank of Zimbabwe is the custodian of public trust and has an obligation to safeguard the integrity of payment systems. Cryptocurrencies have strong linkages and interconnectedness with standard means of payments and trading applications and rely on much of the same institutional infrastructure that serves the overall financial system.”

In a separate statement, RBZ’s governor, John Mangudya, warned the public against virtual currencies, stating that those who trade them “do so at their own risk,” and won’t have any recourse to the RBZ or any regulatory authority in the country should anything happen.

The central bank’s banking embargo comes after, in November 2017, it dubbed the use of cryptocurrencies like bitcoin as a payment illegal until the country developed a regulatory framework for crypto’s.

In Nov 2017, RBZ deemed the use of digital currencies like Bitcoin as payment illegal, until financial authorities establish a regulatory framework for the cryptocurrencies.

RBZ moves come after the Reserve Bank of India (RBI), announced a similar embargo on April, which forbade all financial institutions in the country from dealing with crypto-related accounts.

 

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