Cryptocurrencies have changed the way people perform transactions while its underlying technology can even threaten Central Banks from operating. That’s because of the reality that blockchain technology allows users to get rid of third parties in confirming transactions.
In 2017, Bitcoin gained popularity mainly because of media hype and speculation and was even able to reach approximately almost $20,000. For this reason, regulators all over the world had no other choice but to clamp down on the use of cryptocurrencies. Ultimately, different regulators all over the world mentioned illicit activities and fraud as main reasons why they ban cryptocurrencies. For one, China has announced a blanket ban on ICOs and cryptocurrency exchanges in September 2017.
Zimbabwe Banning Cryptos
One of the top executives of the Reserve Bank of Zimbabwe, Norman Mataruka, released a circular that addressed institution’s concern over cryptocurrency trading. The circular that was issued on May 11, 2018, gave a maximum of 60 days in order to finalize businesses within exchanges before the ban is going to be in effect.
According to the circular: “The Reserve Bank of Zimbabwe has not authorized or licensed any person or entity or exchange for the issuance, sale, purchase, exchange, or investment in any virtual currencies/coins/tokens in Zimbabwe. Exchanges such as Bitfinance (Private) Limited (Golix)and Styx24 are not licensed or regulated by the Reserve Bank…As Monetary Authorities, the Reserve Bank is the custodian of public trust and has an obligation to safeguard the integrity of payment systems”.
John Mangudya who is the governor of RBZ’s bank warned investors mainly about the dangers of trading cryptocurrencies. He mentioned that Golix is not licensed or regulated by the institution. He also mentioned that RBZ will continue to monitor both regional and global developments in cryptocurrencies in order to give recommendations to policymakers.
“Any person who buys, sells, or otherwise transacts in cryptocurrencies, whether online, or otherwise, does so at their own risk and will have no recourse to the Reserve Bank or to any regulatory authority in the country”.
What Happens Next?
So what exactly should people do? The central bank wants cryptocurrency investors to get rid of all their cryptocurrencies. They mentioned that “banking services would include maintaining accounts, registering, trading, clearing, collateral arrangements, remittances, payment, and settlement accounts, giving loans against virtual tokens”.
Countries That Have Used Cryptocurrencies
But of course, not all countries have a negative view of cryptocurrencies. In fact, there are those countries such as Russia and Venezuela that even created their own cryptocurrencies. In addition to this, Japan, despite its tougher stance in operating crypto exchanges, is very open-minded about the concept of blockchain technology and its benefits.
How exactly will Zimbabwe’s ban affect crypto prices? Is it simply because the crypto market is quite young that regulators still don’t have an idea about its full capacity? If you will ask Bill Gates, though he gave a negative impression on cryptos such as Bitcoin, he recognized the potential of blockchain technology. Nowadays, there are banks that are already testing blockchain technology in order to perform cheaper and faster transactions.