The Reserve Bank of Zimbabwe (RBZ), the country’s central bank, has recently banned domestic financial institutions from dealing with cryptocurrencies, a move reportedly made to protect the public and safeguard the country’s financial system.
According to a report published by news outlet NewsDay, the Reserve Bank of Zimbabwe’s director and registrar of banking institutions, Norman Mataruka, announced the move through a circular that ordered financial institutions to exit any existing relationships with cryptocurrency exchanges within 60 days, and subsequently liquidate existing accounts.
The circular included a broad spectrum of what the RBZ considers “banking services,” presumably to avoid seeing cryptocurrency exchanges or financial institutions take advantage of potential loopholes.
Per Mataruka, financial institutions were ordered to ensure both individuals and businesses do not “use, trade, hold and/or transact in any way in virtual currencies.” Accepting cryptocurrencies as collateral, or opening accounts in any way related to cryptocurrencies is also prohibited.
Explaining the move, the central bank official stated:
“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, the central bank’s governor, John Mangudya, warned the public against cryptocurrencies, noting that those who buy them “do so at their own risk,” and won’t have the central bank’s support should anything happen.
According to Mangudya, cryptocurrency exchanges aren’t licensed nor regulated by the RBZ, as the financial institution has “not authorized or licensed any person or entity or exchange for the issuance, sale, purchase, exchange, or investment in any virtual currencies/coins/tokens in Zimbabwe.”
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 cryptos.
Notably, bitcoin is in demand in Zimbabwe, as the flagship cryptocurrency is currently trading at $12,220 in the country’s largest cryptocurrency exchange, Golix. At press time, bitcoin is trading at a global average of about $8,360, according to data from CryptoCompare.
India’s central bank, the Reserve Bank of India (RBI), announced a similar ban last month, which prohibited all financial institutions in the country from dealing with cryptocurrency-related accounts.