Zimbabwe central bank warns over Bitcoin currency

Bitcoin (virtual currency) coins placed on Dollar banknotes are seen in this illustration picture, November 6, 2017. REUTERS/Dado Ruvic/Illustration

HARARE,– The Reserve Bank Of Zimbabwe (RBZ) warned the public against investing in cryptocurrencies such as bitcoin, saying those engaging in virtual currency transactions will not have legal protection or recourse in the event that they lost their hard earned money.

Virtual currencies are neither regulated nor issued by public authority and are without any state guarantee. Nonetheless, there is widespread use of virtual currencies around the globe, which has seen the emergence of bitcoin exchanges, the local exchange, Golix.

On the global market bitcoin is trading at $16,299 while on Golix, Zimbabwe’s bitcoin exchange, the digital currency is trading at $29,500.

“The use of virtual currencies or cryptocurrencies is on the increase both locally and globally and there are entities that are facilitating the purchase and sale of virtual currencies in and outside the Zimbabwe. There are many virtual currencies in circulation, with Bitcoin being one of the most popular,” RBZ governor John Mangudya said in a statement on Thursday.

Digital currencies are normally associated with money laundering and terrorism financing since they allow individuals to transact without their identity being known over the internet.

Mangudya said Bitcoins and other digital currencies do not have legal tender status in Zimbabwe and those engaged in such transactions are not protected by the current regulation.

“The Reserve Bank of Zimbabwe wishes to advise members of the public that the use of and trading in cryptocurrencies or virtual currencies is not regulated by the country’s laws and presents risks such as money laundering, terrorism financing, tax evasion and fraud. Under the existing legal and regulatory dispensation, any person who invests in virtual currencies or participates in any transaction involving virtual currencies, does so at own risk and will not have legal protection from, or recourse against, and regulatory authority,” Mangudya said.

Most governments around the globe banned bitcoins and other cryptocurrencies for facilitating money laundering and unauthorised financing.

Despite such criticism from some central banks, Blockchain chief executive Peter Smith, whose company provides technology to secure cryptocurrencies, believes that the total value of all cryptocurrencies in the world will hit $1 trillion in 2018 and central banks will hold cryptocurrency in reserve, alongside gold and foreign currencies.