Zimbabwe loosening its tough line on crypto? | Crypto News

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Harare, Zimbabwe When Mthuli Ncube was appointed Zimbabwe’s finance minister in September 2018, the country’s crypto enthusiasts were hoping he would lift some of the restrictions on cryptocurrency trading.

Truly optimists hoped he would become a champion of digital currencies.

When he joined the government he was optimistic about cryptocurrencies, William Chui, one of the founders of Golix, a now defunct cryptocurrency exchange in Harare, told Al Jazeera.

A year before Ncubes’ appointment, Zimbabwe’s central bank ordered all banks to stop processing transactions involving cryptocurrencies, calling Bitcoin and other altcoins the currency of choice for money launderers and other criminals.

The executive order saw the Chuis company shut down and cryptocurrency traders slip from the radar of government authorities.

But during a trip to the United Arab Emirates last month, Ncube touted at least some of the potential virtues of cryptos.

I visited the DMCC Crypto Center in Dubai, which is a fascinating incubation center for cryptocurrency and payment solutions, Ncube tweeted during his visit to the United Arab Emirates last week. I came across some solutions that could reduce diaspora remittance costs.

I visited the DMCC CRYPTO CENTER in Dubai which is a fascinating incubation center for cryptocurrency and payment solutions. I came across some solutions that could reduce diaspora remittance costs. pic.twitter.com/krhW8EJHLE

Teacher. Mthuli Ncube (@MthuliNcube) September 9, 2021

But despite official cries, few believe Zimbabwe is on the verge of reversing its ban on crypto transactions.

Many crypto supporters see the Ncubes tweet as a signal that the government of Zimbabwe, like governments of other countries, is simply trying to select some of the benefits of blockchain technology without ceding monetary control.

Blockchain yes, Bitcoin no

Nearly three million Zimbabweans live abroad, and the money they send home accounted for just over 7 percent of the country’s economic output last year, according to the World Bank.

But intermediaries appropriate a large part of the transfer pot: between 10 and 20% commission fees to facilitate money transfers from abroad.

With disruptive blockchain technology, the cost can drop dramatically, said Clive Mphambela, chief communications officer for the finance ministry.

The uses of blockchain are much broader than just crypto. We even have a sandbox group to analyze the use of blockchain technology in Zimbabwe created by the Reserve Bank, he told Al Jazeera.

But some question the official enthusiasm for blockchain technology.

I don’t think the government will be willing to embrace this, said Batanai Moyo, a Harare-based crypto trader. This means that they would give up some of their power in terms of controlling the monetary system.

The uses of blockchain are much broader than just crypto.

Clive Mphambela, Ministry of Finance

Chui, one of Zimbabwe’s leading cryptocurrency traders and promoters, also doubts official blockchain enthusiasm will soften the government’s crypto ban.

Unfortunately, the government has yet to recognize cryptocurrencies as an asset class, Chui said. I think his tweet was more personal and in no way represented the government’s point of view.

Zimbabwe is hardly alone. Governments around the world have placed restrictions and even outright bans on the trading and use of cryptocurrencies as they attempt to strike a balance between reaping the benefits of blockchain innovations without losing control of the systems and monetary policies.

But a hard line can have unintended consequences. After Zimbabwe banned cryptocurrency transactions, the country’s crypto traders went underground. They are now relying on social media to buy and sell the country’s digital assets from a network of die-hard traders and enthusiasts.

Unfortunately, the government has yet to recognize cryptocurrencies as an asset class.

William Chui, crypto trader

Currently, trading is done on a peer-to-peer basis, Chui said. We use social media to communicate, whether on Signal, Telegram, WhatsApp and Facebook.

But the workaround is problematic, he added. Buy and sell orders can take much longer to process, resulting in lower profits and larger losses. Social media platforms are also fertile ground for crooks. In one notorious case, a crypto-pyramid scheme allegedly defrauded investors of $ 5 million.

Millions of people have been scammed, Chui said.

The innovation curve

Even if the government embraces crypto, economists say Zimbabwe may be too far behind the innovation curve to even feed a competitive local crypto industry.

In terms of cryptocurrency, we are way too late compared to Dubai, and when you look at local citizens, they have issues of trust and security when it comes to money, Victor Bhoroma told Al Jazeera. , an independent economist based in Harare.

If the government does eventually loosen its hard line, Bhoroma sees it happening slowly.

Based on what has happened in the past where people have lost millions in pyramid schemes and failed to get the money back, the adoption of cryptos is going to be slow, he said. declared. We are more of a lagging market. Yes, they will be the first to adopt, but in the short to medium term, I don’t really see many people accepting the use of cryptocurrencies widely.

But even small steps from the government would be an improvement, Chui said.

I think more can be done to protect people who trade cryptocurrencies, he said. If regulated exchanges are approved and licensed, it would help bring transparency and certainty to the market.

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