RBZ questions the use of Bitcoins

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Prosper Ndlovu Bulawayo Bureau
The Reserve Bank of Zimbabwe (RBZ) has dispatched a team of experts to interrogate the use of Bitcoins and other crypto-currencies as central banks across the globe grapple with the legitimacy puzzle and growing appetite for the digital currencies.

The aggregate value of all crypto-currencies hit a record high of around $184 billion on Wednesday, Reuters reported, making their reported market value worth around the same as that of Goldman Sachs and Morgan Stanley combined.

According to Reuters, the new peak came as the biggest and best-known crypto-currency, Bitcoin, which was introduced in 2009 – hit a record high of more than $6,500 BTC=BTSP – as price multiplied by the number of coins that have been released into circulation, to a record high just shy of $110 billion.

RBZ Deputy Governor, Dr Khupukile Mlambo, said the apex bank was closely watching developments in crypto-currency usage to examine opportunities and risks involved should the model be adopted into mainstream financial system.

“As the Central Bank, we are watching this issue of Bitcoins seriously because clearly the future seems to be going in that direction although up to now we haven’t recognised them (Bitcoins),” he said.

“We have people in the RBZ who are looking into that, especially some of our colleagues in the central bank have started accepting it and we know that in Zimbabwe there is interest in Bitcoins.”

South Africa-based Zimbabwean millionaire, Frank Buyanga, is already involved in an aggressive gold medallion enterprise. According to Reuters, the latest surge in bitcoin “has seen an eye-watering increase of almost 800 percent in the past 12 months”, said the agency, which also observed that Wall Street’s warning to celebrities and individuals on possible breach of securities law when promoting investments in initial coin offerings (ICOs), as a means for companies to raise funds online.

As the crypto-currencies craze grips the world, Reuters says ICOs have become an increasingly popular fundraising mechanism for young technology companies, enabling them to quickly raise millions of dollars by creating and selling digital coins online with little regulatory oversight. Dr Mlambo, however, could not rule out the possibility of domestic adoption of the innovative crypto-currency technology although he expressed reservations about its nature.

“I understand the economics of it but the technology is very complicated to me. Just over a year ago these Bitcoins were going for about $1000. If you have invested your $1000 two years ago you could be having $6000 now. So, it looks like its lucrative but also may be very speculative,” he said.

During a recent business seminar in Bulawayo, participants had asked Dr Mlambo to clarify the RBZ position on crypto-currency usage in Zimbabwe in the context of foreign exchange shortage. Some requested that the apex bank gives licences for enterprising individuals to deal with Bitcoins and gold medallions. In his response Dr Mlambo said such a move would require involvement of relevant ministries such as the Ministry of ICT, Postal and Courier  Services. He acknowledged that within the region Mauritius, for example, was already accepting payment of taxes in Bitcoins.

“On gold medallions, the law says only Fidelity Printers and Refiners deals with gold and unless you change that law it’s very difficult. I know the Ministry of Mines can give special licenses and maybe they can look into that but at the moment the law says it’s Fidelity,” said Dr Mlambo.

ICT expert, Mr Robert Ndlovu, believes embracing crypto-currencies could ease Zimbabwe’s problem with international payments. “Crypto-currencies have no central location or control and they are pretty anonymous. But to the user they offer the best value for money.

Transactions are less than 1c and some even free. If you have not started using Bitcoins and you are in Zimbabwe you could be in for a rude awakening,” he said .

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