Zimbabwe Central bank Defends Cryptocurrency Trading Ban

Zimbabwe Central bank Defends Cryptocurrency Trading Ban

June 20, 2018 Off By Sydney Ifergan

The Reserve Bank of Zimbabwe has filed its court papers supporting its directive to ban the crypto exchange company, Golix, from transacting with banks and saying that the directive was procedural.

The Zimbabwean banks argue that through continuing the process of crypto transactions by formal banking, channels offered risks to the financial system while the Golix’s platform for selling virtual currencies are not regulated or registered.

John Mangudya, the governor of the Reserve Bank of Zimbabwe, said in his opposing papers which are filed last Friday, June 8, 2018, that the applicant is not a licensed financial or banking institutions, but it went on providing banking services.

He also supported his statement by saying that Golix facilitates currency exchange services, banking services, operation on automated teller machine and money transfer services – all require licensing. The Central bank of Zimbabwe also conceded that research and investigation are ongoing about the cryptocurrencies. The central bank also explained that it had issued a directive for banks to discontinue all the processing transactions involving bitcoin and other digital currencies after realizing that Golix was dealing with banks to address risky and illicit financial transactions.

The officials at Golix insist that their exchange platforms adhere to the strict Know Your Customer principles to help the usage of cryptocurrencies for illegal financial flows. Zimbabwe is currently facing foreign exchange currency shortage which prompted people to find alternative channels to buy goods from international suppliers and to send money abroad.

Zimbabwe’s central bank is insisting that the risks that fund from illegal sources will be introduced to the financial system abound. According to John Mangudya, the risk of collapsing investment is very high. Magudya also denied that the central bank banned the Golix from proceeding with its operations. The High Court of the country said last month that Golix could resume trading cryptocurrencies. After the application to stop the reserve bank from halting crypto operations, the High Court ordered Golix to continue its operations.

Although the country has made a new set of regulatory moves to fix the trade in cryptocurrencies, while its neighbor, South Africa already taxes investment operations from virtual currencies. It was also mentioned last week that it had concluded a pilot test for the Blockchain technology usage for the banking system. It was then concluded that the Blockchain technology help reduces the transaction time for the financial payments.

 

 

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