Zimbabwe bans banks from processing payments for cryptocurrencies

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Zimbabwe’s central bank has stopped local banks from trading or processing payments linked to cryptocurrencies like bitcoin, its Governor said on Monday, but stopped short of banning local cryptocurrency trading exchanges.

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In the southern African nation, those who trade in bitcoin say it offers rare protection as their bank deposits lose value almost by the day while others use it to fund family members studying abroad or purchase goods online.

On Golix.com, the larger of only two trading platforms for virtual currencies, bitcoin was trading at $12,400 on Monday. Reserve Bank of Zimbabwe Governor, John Mangudya, however, said in a statement, the central bank had not licensed anyone to trade in virtual currencies and that dealers and investors did not have the protection of the law.

“The Reserve Bank has directed all banking institutions not to provide banking services to facilitate any person or entity in dealing with or settling virtual currencies,” Mangudya said.

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“The nature of cryptocurrency transactions make them the currency of choice for money launderers and other criminals.”

Prices of digital currencies such as bitcoin rocketed at the end of last year as retail investors across the globe scrambled to get a piece of the profits. That triggered regulatory warnings and threats to crack down on the market.

China, a major market, has shut down local cryptocurrency trading exchanges. Officials from Golix and Styx24.com, Zimbabwe’s other trading platform could not immediately comment on the central bank decision.

An industry insider who follows the cryptocurrencies in Zimbabwe said the RBZ ban would affect settlements between exchanges but sales between individuals would not be impacted.

“We can sit over a cup of coffee and transfer cryptos among ourselves. The entire logic of crypto is peer to peer transaction without trusted third parties,” said the insider.

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