It’s been a dramatic past few weeks for the cryptocurrency sphere in Zimbabwe, particularly for the country’s first and biggest digital money exchange Golix.
A surprise hard-line position from the Reserve Bank of Zimbabwe (RBZ) banning cryptocurrencies led to a chain of fractious events — the shutting down and unshutting down of Golix, litigations, and fretful commercial banks complying with an unlikely order. A $36 million token sale was shelved. Hope turned into despair and then outright gloom for many a virtual currency investor.
All this, as Zimbabwe tried to find and define its place in the emerging, disruptive global crypto scene.
The drama unfolded around an economy that largely doesn’t care about digital currencies, much less understand them.
There is much bigger fish to fry, like job creation and ending poverty.
So the ban would have easily sailed under the radar unnoticed, were it not for a few mainstream press headlines drawing public attention to it.
But that has changed nothing for the roughly 70 000 or so Zimbabweans dealing in cryptocurrencies.
Get your money out
Golix customers are frustrated beyond belief with the failure to withdraw their money locked up at the exchange. And not least, the central bank’s actions.
They feel that the RBZ is behaving like the proverbial high school bully — self-hating and insecure, finds fulfilment stifling seemingly weaker subjects.
But commercial banks have not altogether ruled out a more flexible partnership with crypto exchanges in future — and neither have they made any public comment to the contrary.
The Reserve Bank’s sweeping control over financial institutions, however, casts a long shadow not only on the banks-crypto exchanges’ relationship, but also cryptocurrency trading and investment here.
There is uninamity amongst crypto investors — and the digital exchanges — that the RBZ must back off, at least as far as complete bans are concerned.
The courts seem to support this idea, too.
High Court Judge Alfas Chitakunye said recently that Golix could resume trading after central bank officials failed to turn up at court to defend their crypto ban when challenged by Golix to do so.
The RBZ could still challenge the decision.
So, Golix’s victory looks only temporary.
Indeed, banks have yet to fully restore account services to Golix, even in light of the favourable court ruling.
Golix said this week it will not comment on matters that are sub-judice, but admitted relations with their bankers had deteriorated.
“The (High Court) interim relief does not guarantee that we will get our bank accounts reopened,” said the exchange in an update to investors on May 29.
“We are working hard to get our bank accounts reopened . . .”
In other words, the Reserve Bank of Zimbabwe, with full control over bank notes and coins and over all banking activities, is still running the show.
It may very well be this knowledge that the RBZ snubbed the court challenge.
Piece of the cake
As the crypto ban two weeks ago reached fever pitch, the equivalent of a bank run became palpable on Golix.
Reports say customers attempted to withdraw a minimum $30 000 from the exchange each day — quite a big figure on a platform that traded only a small fraction of the amount when it was forced to shut down on May 15.
Golix has now told investors to get their money out and to stop making deposits, until the dust settles.
“ . . . We have started a separate conversation with banks to allow us to send customer funds we are holding back to the customers and because the bank would like to limit the activity on the accounts, we cannot be able to process withdrawals as often as we used to,” the exchange said.
Despite Golix’s apparenntly good intentions, this looks like a win for the RBZ, and defeat for financial technology development. It is defeat for all cryptocurrency and blockchain lovers.
And frankly, money is what it all boils down to.
The central bank wants a piece of the crypto millions.
They aren’t getting any right now, certainly not with cross-border virtual currency transfers bypassing Zimbabwe’s exchange control laws.
Following the different reactions and declared intentions of both the RBZ and Golix in recent weeks, it occurs to us that the exchange’s demise is truly a sad day for cryptocurrencies in Zimbabwe, and an indictment on the old guard at the RBZ, one steeped in tradition.