Zimbabwean banks are currently unprepared to embrace cryptocurrency trading and investment services, despite ongoing efforts by regulators to draft a framework for its adoption in the local market. This revelation came to light at the recent inaugural Capital Markets Conference held in Nyanga.
The Securities and Exchange Commission of Zimbabwe (SecZim) and the Reserve Bank of Zimbabwe (RBZ) are collaborating on a framework to facilitate the trading of virtual assets within the country. Virtual assets encompass a digital representation of value that can be traded or transferred digitally, and they can be used for payments or investment purposes. Among these assets are cryptocurrencies, digital tokens, non-fungible tokens (NFTs), and digital codes.
Historically, the RBZ has prohibited the use of cryptocurrencies, only reconsidering this stance now due to the burgeoning global market, which has reached a valuation of US$2.42 trillion. Despite this, the readiness of Zimbabwean banks to integrate these digital currencies remains in question.
Fanwell Mutogo, Chief Executive Officer of the Bankers Association of Zimbabwe, highlighted the banks’ current position: “Zimbabwean banks are not yet poised to fully embrace cryptocurrency trading as this is still a new development which is still undergoing research.” Mutogo acknowledged the central bank’s growing interest in digital currencies, citing the introduction of a gold-backed digital token as a step in this direction. He further explained, “Gold-backed tokens have a clear backing (physical gold), whereas cryptocurrencies rely on network consensus and cryptographic security. Examples of cryptocurrencies include Bitcoin and Ethereum.”
In April, it was reported that RBZ Governor John Mushayavanhu had considered the potential of cryptocurrency as a local tender before ultimately deciding on the Zimbabwe Gold (ZiG) currency. This move underscores the central bank’s cautious yet progressive approach towards integrating digital assets into the financial system.
Financial analyst Ranga Makwata pointed out the significant potential for widespread cryptocurrency adoption in Zimbabwe, given the country’s history of hyperinflation and economic instability. “Many will see crypto as a worthwhile alternative, which is not prone to waves of hyperinflation unlike what we have seen with the local currency,” Makwata noted. He emphasized that factors such as economic instability, high interest in digital currencies, a tech-savvy youth population, and the need for efficient remittances support the rapid adoption of cryptocurrencies.
However, Makwata also identified several challenges to full-scale adoption, including regulatory uncertainty, limited infrastructure, and low financial literacy regarding cryptocurrencies. He urged the RBZ and SecZim to establish a clear and supportive regulatory framework to unlock the potential of cryptocurrencies in Zimbabwe. “This framework should provide legal certainty, consumer protection, and guidelines for legitimate use of virtual assets,” he stressed.
Makwata further recommended several measures to facilitate the adoption of cryptocurrencies: increasing public financial literacy, particularly targeting tech-savvy youth; developing robust digital and financial infrastructure; fostering collaboration between traditional financial institutions and cryptocurrency platforms; and implementing strong cybersecurity measures. “By addressing these elements and effectively regulating the virtual assets space, Zimbabwe can harness the benefits of cryptocurrencies for economic growth, financial inclusion, and technological innovation,” he concluded.
The path towards cryptocurrency integration in Zimbabwe is filled with both opportunities and obstacles. While the regulatory framework is a crucial step forward, the readiness of the banking sector and the broader financial ecosystem will ultimately determine the success of cryptocurrency adoption in the country.