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Zimbabwe still flirting with cryptocurrencies

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John Mangundya, Governor of the Reserve Bank of Zimbabwe, said this week the institution was 'poised to embrace' blockchain technology, but added that it would adopt a cautious approach.

The Southern African country has initiated a feasibility study on the use of blockchain technology, specifically cryptocurrencies, as it continues to deal with cash shortages.

Mangundya said, "Blockchain encompasses all the cryptocurrencies, such as bitcoin. We're putting in motion studies, ways and means of investigating the blockchain technology."

He added that central banks in the US, China, UK and South Africa are all investigating the use of blockchain and that Zimbabwe "should not be left out".

"We want to know where it (cryptocurrency) is being mined. The issue is - what is their source and how do they do it?"

At the same time Mangudya reiterated that virtual currencies do not have legal tender status in Zimbabwe and those who trade in Bitcoin are liable to risk as there is no legal protection or recourse in the event of something going wrong.

He said the Reserve Bank would continue to closely monitor regional and global cryptocurrency developments in order to inform policy direction.

Officials from trading platforms Golix and Styx24.com could not comment on Mangudya's statements.

Bitcoin prices on the Golix online platform (different from trade on the Golix ATM) fetch a premium in Zimbabwe and on Monday traded around US$9 839 by COB.

Currency crossroads

The Reserve Bank is seemingly at a crossroads regarding virtual currencies.

In May 2018, Mangudya issued a statement asking local banks to stop trading or processing payments linked to cryptocurrencies.

The Bank said the decision was meant to protect the public and safeguard the country's financial system.

According to a report by local state-controlled newspaper The Herald, High Court Judge Justice Alphas Chitakunye lifted a ban on cryptocurrencies in Zimbabwe following a successful application by local cryptocurrency exchange Bitfinance.

"The ban issued by respondents through letter dated May 15, 2018 against applicant, directing it to cease its operations, shut down its virtual currency exchange business and ordering the closure of its bank accounts with its bankers, be and is hereby suspended pending the return day," ruled Justice Chitakunye.

 

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