Zimbabwe bans banks from processing payments for cryptocurrencies

Reserve Bank of Zimbabwe says it has stopped local banks from trading or processing payments linked to cryptocurrencies like bitcoin.

The apex bank Governor, John Mangudya, said on Monday in Harare that the central bank had not licenced anyone to trade in cryptocurrencies and that dealers and investors did not have the protection of the law.

Cryptocurrency is a digital or virtual currency in which coded techniques are used to regulate the generation of units of currency and verify the transfer of funds. It operates independently of a country’s central bank.

Mangudya said that the Reserve Bank had directed all banking institutions not to provide banking services to facilitate any person or entity in dealing with or settling virtual (crypto) currencies.

“The nature of cryptocurrency transactions makes them the currency of choice for money launderers and other criminals,” Mangudya said in a statement.

Prices of digital currencies such as bitcoin rocketed at the end of last year as retail investors across the globe scrambled to get a piece of the profits.

That trend triggered regulatory warnings and threats to crack down on the market.

Officials from Golix and Styx24.com, Zimbabwe’s trading platform could not immediately comment on the central bank decision.

An industry insider who follows the cryptocurrencies in Zimbabwe said the ban would affect settlements between exchanges but sales between individuals would not be impacted.

“We can sit over a cup of coffee and transfer cryptos among ourselves. The entire logic of crypto is peer to peer transaction without trusted third parties,” said the insider, who declined to be named because he is not authorized to speak to the press.

In the southern African nation, those who trade in bitcoin say it offers rare protection as their bank deposits lose value almost by the day while others use it to fund family members studying abroad or purchase goods online.