Zimbabwe: Central Bank Set to Introduce Regulatory Sandbox for Cryptocurrency

Zimbabwe’s central bank, the Reserve Bank of Zimbabwe (RBZ) is making plans to regulate the cryptocurrency industry, as there is a draft policy framework underway. A robust regulatory framework in place will see the development of the crypto sector in the country.

RBZ to Regulate Crypto Businesses

According to a report by the Chronicle on Monday, March 16, 2020, Josephat Mutepfa, RBZ’s deputy director financial markets and national payments system, revealed the news of a policy framework for crypto firms and other fintech businesses by the RBZ. Speaking at the Sound Prosperity Economic Forum held in the city of Bulawayo on March 13, Mutepfa said:

“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 crypto-currency companies as to how they are going to operate.”

The RBZ executive also stated that the sandbox will act as an “experimenting zone” pending when the main sandbox arrives. Mutepfa continued by saying:

“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”

Furthermore, the RBZ’s plan to regulate the crypto market comes as a result of some challenges faced by the fintech industry. According to Mutepfa, cryptocurrency has seen massive adoption among the country’s youths who struggle to get capital.

Also commenting on the RBZ’s policy framework was Brian Maseva, the business advisor for local digital currency firm, SPURT, who stated that liaising with the country’s apex bank will garner attraction from the public towards cryptocurrency. Also, a robust regulatory framework will boost the virtual currency industry in Zimbabwe.

Zimbabwe’s Unfavorable Stance Towards Crypto

Zimbabwe, like most governments across the globe, has been skeptical about cryptocurrency. The government of Zimbabwe has continuously warned its citizens about the risks involved in digital currency trading, adding that neither the RBZ nor the government would help investors who become victims of fraudulent bitcoin schemes.

However, the RBZ’s plan to regulate the virtual currency sector signals a turnaround from its negative attitude towards the nascent industry. Back in 2018, the apex bank banned citizens from possessing, trading, or transferring bitcoin. In addition, financial institutions in the country were also asked to cease any dealings with bitcoin-related businesses.

Shortly after the ban, the country’s largest crypto exchange, Golix exchange, took the RBZ to court, stating that the central bank had no right to take such decisions. Zimbabwe’s justice system ruled in favor of the bitcoin exchange.

Despite the country’s stance towards crypto, Zimbabweans have turned to bitcoin to escape the hyperinflation plaguing the country. There was a surge in crypto adoption in 2019, following the government’s ban on the use of foreign currencies.