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Is Zimbabwe ready to embrace cryptocurrencies?

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As the use of cryptocurrencies becomes increasingly pervasive in Africa, the Reserve Bank of Zimbabwe (RBZ) has not been sold on the new trend.

In fact, it has out-rightly banned the use and trade in cryptocurrencies in Zimbabwe.

Could this be construed as a sign the country is not yet ready to embrace use of cryptocurrencies?

Zimbabwe is in overdrive as it strives to modernise its economy in line with Vision 2030.

In doing so, it should embrace digital virtual technology to create an efficient financial services system and products that can be easily accessed, at low-cost, by the majority of its citizens in line with the global thrust for financial inclusion.

Digital technological innovations underlying cryptocurrencies such as blockchain should be embraced by our central bank, as they have the potential to improve efficiency in local financial services.

Cryptocurrencies, also known as virtual currencies, are a digital medium of exchange, which is unlike our normal fiat currency that exists in the form of physical bank notes introduced through legal instruments, or commodity money backed by gold or other precious stones.

Most commonly used cryptocurrencies worldwide are Bitcoin, Ethereum, Dash, Monero, LiteCoin, Ripple and so on.

Their global value presently exceeds US$500 billion.

Localised virtual currencies are also traded in different countries.

Cryptocurrencies, unlike fiat money, are not controlled by a single administrator, like a central bank, as they work on a decentralised digital platform or ecosystem.


Blockchain digital technology is the driver of cryptocurrencies as the central nervous system is to humans.

Blockchain uses cryptography to create (mine) and store units, secure transactions, transfer tokens and effect payments.

These digital processes change a crypto from being a mere digital token into a digitised asset with an economic value.

This means users can earn it, store it, trade it, transfer it or sell it.

Most developing countries’ central banks do not recognise cryptocurrencies as money, medium of exchange or legal tender.

In Europe and the USA, central banks have generally cautioned, but not banned, the use or trade in cryptocurrencies.

Although trading in cryptocurrencies in Africa has not spread widely to people at the bottom of the pyramid, their use is growing in tandem with ICT technological advancements, high mobile penetration, growth in literacy and financial inclusion and consumer sophistication.

Ban on cryptocurrencies

African central banks link cryptocurrencies to price volatility, fraud, money laundering, tax evasion, exchange control circumventions, terrorism financing and other criminal activities fuelling illicit financial transactions.

While some of these concerns are genuine, others tend to be hyperbolic as traditional financial systems are also fraught with similar risks.

On May 11 2018, the RBZ issued a notice warning the public against use of cryptocurrencies.

It also directed all banking institutions not to provide banking services to facilitate any person or entity in dealing with or setting up cryptocurrencies.

RBZ announced in the same notice that Bitfinance and Styx24 — leading local cryptocurrency exchanges — had not been licensed.

It further noted that any person who buys or sells or otherwise transacts in cryptocurrencies does so at their own risk and will not have recourse to the central bank.

On May 15 2018, Golix, which was in the process of rolling out its initial coin offering (ICO) that sought to raise US$32 million through a token sale, was directed by RBZ to cease all cryptocurrency exchange operations.

Golix filed an urgent chamber application with the High Court challenging the legality of the RBZ ban on the basis that the central bank acted illegally, irrationally, unconstitutionally and outside the ambit of administrative law in closing its virtual currency exchange.

On May 24 2018, the High Court issued a default judgement against RBZ and ruled, inter alia, that: “The ban issued by the respondents [RBZ] through letter dated May 15 2018 against the applicant [Golix], directing it to cease its operations, shut down its cryptocurrencies exchange business and ordering the closure of its bank accounts with its bankers, be and is hereby suspended…”

The ban in trading in cryptocurrencies from mainstream financial systems does not seem to be practical and effective.

Such prohibitions force consumers to use black market trading avenues or simply resorting to peer- to-peer (P2P) digital trading platforms.

South Africa

The South African Reserve Bank (SARB) has taken a very pragmatic approach.

While the SARB does not officially recognise cryptocurrencies as “money” but as “cyber tokens”, it has preferred to adopt a cautious, but pragmatic approach to ensure that trading in cryptocurrencies complies with relevant financial surveillance and exchange control regulations.

Already, a sizeable number of merchants in South Africa have embraced cryptocurrencies and accept Bitcoin for payments.

Deputy Governor of SARB, Francois Groepe, was quoted by Cryptonews, an online news site, on May 25 2018 saying the central bank has set up a special unit to review the possibility of putting in place crypto-specific policies and regulations.

Way forward

Many people across Africa are increasingly being attracted to cryptocurrencies not only as speculative investments, but as alternative and cheaper payment and settlement methods, conduits for capital investments and options for savings and storing value as most African fiat currencies are volatile against major currencies such as the US dollar.

Instead of throwing tantrums at technological innovations, the RBZ should be pragmatic and set up specialised units dedicated to researching on cryptocurrencies, including emerging blockchain and other digital technologies.

This will enable it to come up with practical policy and regulatory interventions that work for Zimbabwe.

We need home-grown innovative regulatory mechanisms that allow crypto-ecosystems to interface and co-exist with the mainstream financial ecosytems.

Allen Choruma can be contacted on e-mail: