Central Bank Of Zimbabwe Supports A Trading Ban On Cryptocurrencies

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A new development in the crypto world sees Zimbabwe‘s Reserve Bank filing court papers supporting the ban of crypto exchange, Golix, from dealing with the country’s banks. According to the bank, allowing Golix to use formal banking channels is a risk to the financial system of the country.

Working with cryptos is risky, claims the Reserve Bank

Despite Zimbabwe’s efforts to open up to cryptos, their Reserve Bank doesn’t seem to share the overall excitement.

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According to the bank, allowing financial institutes to process crypto transactions puts at risk the country’s financial system, especially since the platform in question is unregulated and unregistered. This was confirmed by John Mangudya, the governor of the Reserve Bank of Zimbabwe, who filed the opposing papers, in which he states that the exchange is providing banking services despite the fact that it is not a bank, or even a licensed financial institution.

He continued to say that all services offered by Golix require official licensing, which the exchange failed to obtain. The central bank of Zimbabwe had issued a directive that will force banks to stop processing crypto transactions after it came to light that Golix is operating with risk and potential illegality.

The use of cryptos is safe

Golix’s officials claim that the exchange has a strict set of rules, especially when it comes to know-your-customer principles. The exchange emphasizes that a large part of their efforts is focused towards preventing the use of cryptos for illegal activities.

Due to foreign currency shortages that the country is currently facing, many of its citizens were forced to seek alternative methods of making cross-border payments or even to buy merchandise from international providers. Cryptocurrencies, mainly Bitcoin, turned out to be one of the most practical methods of bypassing these difficulties.

The central bank, however, continues to insist on the risks that may potentially come with the use of cryptos. Furthermore, it called Golix’s ICO a pyramid scheme, which had to be stopped as soon as possible.

Mangudya denied that the bank has issued a ban on Golix’s regular operations. In a new twist, the High Court of Zimbabwe allowed Golix to continue with its crypto trading after deciding to stop the reserve bank from preventing the trading operations.

According to Mangudya, there was never a total ban on Golix’s actions, only on those that include bank accounts, banks, and banking in general, due to the risks accompanying such actions.

And while Zimbabwe is trying to curb crypto trades via regulatory moves, South Africa has already found a way to impose taxes on earnings derived from trading in cryptocurrencies. Additionally, it has completed testing of the use of blockchains in the banking system, with positive results. According to them, the time necessary for processing transactions will be significantly reduced by implementing this technology.

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