Zimbabwe government could take one step closer to crypto adoption

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Zimbabwe could finally soften its intransigent stance on cryptocurrencies. Its increasingly cryptocurrency-friendly finance minister, Mthuli Ncube, recently said that at this point it would be impossible for the nation to continue to ignore cryptocurrencies.

According to a Herald report, Ncube believes cryptocurrencies will be better served as an investment class instrument rather than legal tender. This position suggests that the Victoria Falls stock exchange platform may list crypto-based products in the near future.

Government of Zimbabwe and crypto

In 2017, the Central Bank of Zimbabwe issued a statement clarifying its position on the use of cryptocurrency in the country. He said Bitcoin and other currencies are not legal tender and therefore should not be treated as such. Virtual currencies are not regulated by Zimbabwe’s laws, apex bank said. And as such, they run the risk of becoming catalysts for money laundering, fraud, tax evasion and even terrorist financing.

The central bank went on to order all banks under its jurisdiction to cease all transactions relating to digital currencies. These include holding, trading or transacting in these currencies or providing services to entities that trade in these currencies.

Total crypto market at $ 2.49 trillion | Source: Total Crypto Market Cap from TradingView.com

Interestingly, recent statements by Minister Ncubes could be a change in attitude towards digital currencies on the part of the Zimbabwean government. The minister appears to be advocating for his government and others to reap the benefits of blockchain technology. That is to say without ceding economic control.

With commission fees for all remittances by Zimbabweans living abroad reaching up to 20%, the use of disruptive technologies like blockchain could significantly reduce these costs. Thus increasing the value of remittances to the Zimbabwean economy from its current 7%.

Related reading | Zimbabwe finally decides to regulate cryptocurrency

The minister hinted that the Zimbabwean government had started the process of regulating digital currencies. The government has already created a framework that will serve as a regulatory sandbox where the use of cryptocurrency in the country can be tested in a controlled environment.

Adoption of crypto in African countries

The adoption of cryptocurrencies in Africa is at an all time high. The value of cryptocurrencies between July 2020 and June 2021 rose 1,200% to $ 105.6 billion, according to the Chainalysis Geography of Cryptocurrency report. This growth could be the result of several factors. The devaluation of fiat currencies against cryptocurrencies that have experienced significant growth is causing citizens to seek more protection for their money. The ease of cross-border transactions also contributes to the adoption of cryptocurrencies. Remittances to African countries can be done in seconds compared to days using traditional banks at a fraction of the cost of commission.

Related Reading | New Convert: Nigeria’s Anti-Crypto Central Bank To Launch Digital Naira

While the adoption of these currencies is increasing, African governments generally do not share the enthusiasm of their citizens. A handful of them have even chosen to ban crypto altogether. Nigeria, Kenya, Morocco, Algeria and others have warned their citizens and financial institutions to stop engaging in digital currency trading and transactions.

Image presented by CoinGeek, chart from TradingView.com

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