Connect with us

Regulation

Zimbabwe Finally Decides to Regulate Cryptocurrency

Published

on



Zimbabwe has long been a hive of cryptocurrency trading. But aside from some rumors after the government banned forex trading in Oct 2019, bitcoin’s fate in this country has been someone uncertain. Not for much longer, though. At long last, the Reserve Bank of Zimbabwe (RBZ) has drafted a proposal to regulate cryptocurrency.


Zimbabwe Cryptocurrency Regulation – Not Ban

As we’ve seen from other countries struck by hyperinflation or excessive government intervention in monetary policy, Zimbabwe’s been through it all. Last July, there was a surge in cryptocurrency trading as the government banned foreign currencies.

At its height, Bitcoinist reported that BTC was trading at a staggering 600% premium on peer-to-peer trading platform LocalBitcoins. Shortly after, the government banned mobile cash and forex trading, but the decision on Bitcoin was yet to be taken.

Well, it seems that at last, Zimbabwe is ready to take cryptocurrency seriously and come up with sensible regulation. On Friday, the RBZ announced that it has started to put together a policy framework to give cryptocurrency businesses clear guidelines and to protect investors from scams that are prolific in this country.

The Trend Cannot Be Ignored

According to the Zimbabwe Chronicle, while the apex bank has been hesitant to legitimize cryptocurrency due to the high amount of fraudulent activity, it has finally come to realize that the growing global trend can no longer be ignored–and that it must be regulated.

From fintech to insurance, payments, and trading, many alternatives to traditional banking are emerging alongside cryptocurrencies. These will all be given a clear framework to work from as well.

RBZ deputy director of financial markets and national payment systems Josephat Mutepfa commented: 

We have already started to come up with a fintech framework because in regulation everything should be well structured. The framework, which is a regulatory sandbox, will be assessing the cryptocurrency companies as to how they are going to operate.

He said that this would ensure that all cryptocurrency companies were properly vetted to meet regulatory requirements. 

Once you enter the sandbox you either exist as a bonafide product to enter the market or you are guided to say that you need to partner a bank, a mobile money platform or your product needs to be licensed like a microfinance company… The sandbox will be an experimenting zone. Once the sandbox is there, there will be an application criterion, which will also act in the same capacity as the sandbox.

Cryptocurrency Appeals Mainly to the Young Generation

Mutepfa also noted that the cryptocurrency market was currently largely tapped by the younger generation who face many challenges to accumulating capital. He stated:

The challenge is that in the past the currency was a prerogative of central banks although it has been taken over by the digital currency who also operate within the currency of the country, which, therefore, minimizes loans coming forward.

One of the major challenges, he concluded, was working out how to interpret the monetary policy into all the official languages of the country (at least nine), “in order for the financial sector to blossom.”

So far, according to the Chronicle, local businesses in the country are welcoming the regulation. A representative from key cryptocurrency trading platform SPURT commented:

Meeting with the central bank will help us grow and attract the public to join the digital currency… We are now aware that there is a policy, which elaborates more on fintech guidelines that we need to follow.

What do you make of Zimbabwe’s decision to finally draft cryptocurrency regulations? Add your thoughts below!


Images via Shutterstock



Source link

Regulation

El Salvadorians take to the streets to protest Bitcoin law

Published

on

By



Protesters calling themselves the Popular Resistance and Rebellion Block have come out against El Salvador’s government passing a law making Bitcoin legal tender.

A Tuesday tweet from local news outlet El Mundo shows El Salvadorians carrying banners saying “no to Bitcoin” in the streets of San Salvador demanding a repeal of the country’s Bitcoin law. Legislative assembly members Anabel Belloso and Dina Argueta addressed the protesters after first meeting the group separated by a barrier of razor wire.

In a letter made available at the protest, the Popular Resistance and Rebellion Block group claimed that President Nayib Bukele passed the law making the cryptocurrency legal tender in the country without proper consultations with the people. It also cited the volatility of Bitcoin (BTC), comparing investing in the cryptocurrency to playing the lottery: “betting on the lottery is a voluntary act, while Bitcoin is required by law.”

Related: Coercion and coexistence: How El Salvador’s Bitcoin Law may change global finance

However, the group’s main grievance around the Bitcoin legal framework seemed to be centered around a perceived disparity in the cryptocurrency’s usage by the government when compared with the average resident in El Salvador. Protesters said Bitcoin “only serves some large businessmen, especially those linked to the government, to launder ill-gotten money.”

“Entrepreneurs who put their capital in Bitcoin will not pay taxes on their earnings,” said the letter. “In addition, to apply Bitcoin the government will spend millions of dollars of the taxes paid by the people.”

They added:

“Bitcoin would facilitate public corruption and the operations of drug, arms and human traffickers, extortionists and tax evaders. It would also cause monetary chaos. It would hit people’s salaries, pensions and savings, ruin many MSMEs, affect low-income families and hit the middle class.”

Though passed by El Salvador’s government and signed into law by Bukele in June, the law recognizing Bitcoin as legal currency in the country will not go into effect until Sept. 7. The Popular Resistance and Rebellion Block’s protest was aimed at government officials to demand the law be repealed. In addition, the World Bank has also refused to help El Salvador transition to a Bitcoin-friendly framework, given its “environmental and transparency shortcomings.”

Related: What is really behind El Salvador’s ‘Bitcoin Law’? Experts answer

During a scheduled visit by the U.S. State Department earlier this month, Under Secretary of State for Political Affairs Victoria Nuland suggested El Salvador ensure Bitcoin is well regulated and transparent, but did not explicitly say anything against the country’s move to a more digital economy. Some proponents of the law including Bukele have suggested Bitcoin could help facilitate remittance payments from El Salvador citizens living abroad and lessen the country’s reliance on the U.S. dollar.