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Bitcoins

Zvamaida Murwira Senior Reporter
The Reserve Bank of Zimbabwe (RBZ) has warned members of the public against using Bitcoin, one of several virtual currencies being used outside the country, saying its use is illegal in Zimbabwe.

Virtual currency is defined by the Financial Action Taskforce as a digital representation of value that can be digitally traded and functions as a medium of exchange, a store of value and unit of account, but with no legal tender status.

It is different from money used electronically to represent and transfer value denominated in flat currency or real or national currency. In a statement, RBZ Governor Dr John Mangudya said virtual currencies were not only unregulated, but were neither issued by public authority nor guaranteed by the State.

“The Reserve Bank of Zimbabwe wishes to advise members of the public that the use of and trading in cryptocurrencies or virtual currencies is not regulated by the country’s laws and presents risks such as money laundering, terrorism financing, tax evasion and fraud,” he said.

“Under the existing legal and regulatory dispensation, any person who invests in virtual currencies or participates in any transaction involving virtual currencies does so at own risk and will not have legal protection from, or recourse against, any regulatory authority.”

Dr Mangudya said virtual currencies were attractive to money launderers and other criminals because of their anonymity and ease with which transactions could be conducted on the Internet and across borders.

“In this regard, virtual currencies are not in any way attached to notes and coins circulating in the country. Virtual currencies do not have legal tender status in Zimbabwe or in any jurisdiction in the world,” he said. Dr Mangudya noted that the use of cryptocurrencies was on the increase both locally and globally and there were entities facilitating their purchase and sale in and outside Zimbabwe.

“There are many virtual currencies in circulation, with Bitcoin being one of the most popular,” said Dr Mangudya. Some traders and dealers had been pushing for the use of the virtual currencies, arguing they provided the unbanked public with an opportunity to regain financial control.

But the central bank is on record as saying that while at face value there appeared to be some economic benefits, it discouraged its use, saying any form of unregulated alternatives should not be tolerated.

Bitcoin, which was brought to popularity in Zimbabwe through the MMM pyramid scheme, whereby members could “give help” and “ask for help” in the form of bitcoin, managed to attract as many as 66 000 people. When it eventually crashed, a number of people were “burnt” and left with a sour taste. Some Bitcoin start-ups in Zimbabwe include Bitmari, a company which enables Zimbabweans to send money across countries in Africa at substantially lower costs.