Zimbabwe’s Central Bank to Challenge High Court’s Ruling on Crypto Ban

Zimbabwe’s Central Bank to Challenge High Court’s Ruling on Crypto Ban

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June 18, 2018 by Henrik Bliss
1952
  The Reserve Bank of Zimbabwe (RBZ) is planning to challenge a High Court ruling which blocks its attempt to ban cryptocurrency trading in the country, according to a report by the Global Government Forum. In May this year, the RBZ  gave financial establishments 60 days to cease relationships with digital currency exchanges Golix and
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The Reserve Bank of Zimbabwe (RBZ) is planning to challenge a High Court ruling which blocks its attempt to ban cryptocurrency trading in the country, according to a report by the Global Government Forum.

In May this year, the RBZ  gave financial establishments 60 days to cease relationships with digital currency exchanges Golix and Styx24. The bank argued that cryptocurrencies, such as Bitcoin, were a tool for criminals and money launders.

Golix retaliated by filing a High Court challenge on 24 May, arguing that the Central bank’s ban was against Administrative Justice noted in the Constitution of Zimbabwe. As the central bank failed to offer a defence, the High Court gave a default judgment, permitting the exchange to resume trading.

However, RBZ’s governor John Mangudya has now filed an affidavit in the High Court, opposing Golix’s application to remove the ban on its company. A spokesperson for the bank said that Golix’s “activities were not only unregulated and illegal, but presented all kinds of risk, including but not limited to fraud, money-laundering, evasion of the country’s exchange and terrorism financing,” according to the report.

Bitcoin and other major digital currencies have gained a fairly widespread adoption and many investors are using it as a means to circumvent the huge transaction fees charged by traditional banking services for cross-border payments.

Yeukai Kusangaya, a trade coordinator at the Golix exchange noted that interest in cryptocurrency has peaked in Zimbabwe because people cannot send money abroad or pay for international transactions using traditional banks.

“People have had to look for alternatives, and bitcoin has been a useful solution which can be used to purchase goods on Amazon or to pay for vehicles from international suppliers and traders,” Kusangaya said.

Zimbabwe has adopted the US dollar for making transactions after its local currency was scrapped in 2009 due to hyperinflation. However, the country has been in short supply for the USD since 2015 as a result of low exports.

Consequently, the banks have imposed a withdrawal limit of US$20 on the customers. As a result, the citizens are seeking alternative means for storing their values and making purchases.

 


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