RBZ warns against virtual currency

HARARE - The Reserve Bank of Zimbabwe (RBZ) has warned people against investing and using cryptocurrencies, which it said are risky and unregulated.

This comes as the majority of Zimbabweans are heavily investing in Bitcoin — a type of cryptocurrency — whose prices reached $30 000 early this month compared to the international price per Bitcoin of $16 524.

The surge has been fuelled by Zimbabwean investors seeking a safe haven from domestic banks amid the country’s ongoing political, financial and monetary woes.

While Zimbabwe once had its own currency, it began using a mix of currencies from stable economies including the United States dollar in 2009 after hyperinflation made its own note worthless.

The central bank, however, said virtual currency, which is defined by the Financial Action Task Force, as “a digital representation of value that can be digitally traded and functions as a medium of exchange, a unit of account or a store of value, but does not have legal tender status,” was not a safe way of investment.

Virtual currency is different from fiat currency –— also known as real currency, real money or national currency — which is the coin and paper money of a country that is designated as its legal tender.

The central bank said virtual currency is also not the same as e-money, which is used to electronically represent and transfer value denominated in fiat currency.

“Virtual currencies are not only unregulated but are also neither issued by public authority nor guaranteed by the State. 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,” RBZ governor John Mangudya said.

He added that virtual currencies are attractive to money launderers and other criminals because of the supposed anonymity and ease with which transactions can be conducted, on the Internet and across borders.

“The RBZ wishes to advise members of the public that the use of 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.

“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,” Mangudya said.