Zimbabwe mulls adopting crypto-currency as legal tender
Zimbabwe is preparing to officially adopt crypto-currencies as acceptable legal tender amid a continued financial crisis fuelled by exchange rate volatility and cash shortages.
President Emmerson Mnangagwa’s administration has announced it is consulting on crypto-currency mechanisms to ease payments and currency woes.
Although other governments “are still trying to understand and properly trying to create policies on how to deal” with crypto-currencies, Zimbabwe is now “trying to understand their implication because they are a fundamental departure from previously known financial instruments,” said Charles Wekwete, head of e-government technology within Mnangagwa’s Cabinet.
Speaking at the Computer Society of Zimbabwe Summit, held recently at Victoria Falls, Wekwete said although regulators have expressed concern over cross-border movement of funds, money-laundering, externalisation of funds and "illicit flow of funds to fund illicit issues", Zimbabwe is now consulting on crypto-currency adoption.
He added: "So, government has put in place mechanisms to try and gather views from various sectors of society in order to eventually formulate policies. Sooner or later, government will make statements, but we have not gotten there yet. The consultative process is already under way.”
The southern African country is among several regional markets – including Nigeria, Kenya and South Africa – where crypto-currencies such as Bitcoin are used extensively.
In 2018, Zimbabwe prohibited banks from processing crypto-currency transactions, which resulted in the popular Golix crypto exchange platform tipping over.
In October this year, finance minister Mthuli Ncube visited the DMCC Crypto Centre in Dubai and described it as “a fascinating incubation hub for crypto-currency and payment” solutions.
He added that he had come across “solutions that could lower charges for diaspora remittances”, a comment that was considered an indication of government’s softening approach to crypto-currencies.
Trade and purchases of Bitcoin in Zimbabwe are mostly through peer-to-peer platforms, while Stablecoins are used as a source of investment given the volatility of Zimbabwe’s local currency.
Stablecoins provide some cover as they are hedged against US dollars or other assets such as gold that are less volatile compared to the local currency.