Unaware Where Bitcoins Are Mined, RBZ Governor Embraces Blockchain

The governor of the Reserve Bank of Zimbabwe has made several statements about cryptocurrencies that attest to insufficient knowledge of the matter. The central bank, which recently banned financial institutions from working with crypto companies, now wants to study and embrace the blockchain technology that “encompasses all the cryptocurrencies.”   

Also read: Zimbabwe’s Golix Exchange Enters Kenya, Uganda, South Africa

CB Governor Wants to Know Where Bitcoins Come From

RBZ, the central bank of troubled Zimbabwe, has initiated studies to investigate the blockchain technology and its possible applications. The major financial institution of the inflation-ridden African country considers blockchain a “new developing global innovation” and is willing to embrace it, according to its governor, John Mangudya.

On Wednesday, Mr. Mangudya told guests attending the Alpha Media Holdings Banks and Banking breakfast meeting in Harare that RBZ is moving in that direction, just like many other central banks around the world. “In fact, it is true that for the rest of the world, if you go to countries like United States, China, United Kingdom, and South Africa, it [blockchain] is the issue that is being discussed by the central banks, including the likes of the International Monetary Fund,” he explained.

John Mangudya

Like many of his colleagues, John Mangudya made it clear that he is not referring to the digital money underpinned by the blockchain technology. “I did not say cryptocurrencies because it is lower than blockchain. Blockchain encompasses all the cryptocurrencies such as bitcoin and we are saying we are putting in motion studies, ways and means of investigating that blockchain technology,” he elaborated, noting the need for a cautious approach but also stressing that RBZ should not be “left out” on these developments.

“What we are against as I have always said is to do things which are not regulated because we need to know where these bitcoins are being mined and do want to hunt them. So while we want to embrace things, we need to know where they are coming from. If you embrace mobile banking platforms we know that there is a trust account,” the governor said, quoted by News Day. Mangudya tried to further reason RBZ’s position on cryptocurrencies, demonstrating deficit of basic knowledge of the matter he seems unwilling to understand: “If you are investing in virtual money, we want to know where it is being mined. In fact, cryptocurrencies are just like mobile money because you need a wallet where you deposit the cryptocurrency, but the issue is what is their source and how do they do it?”

Zimbabwe’s Crypto Troubles

John Mangudya’s comments represent another example of how cryptocurrencies fall victim of arbitrary measures imposed by policy makers and regulators that are not quite qualified. The decisions of the central bank in Harare have had serious implications for Zimbabwe’s nascent crypto sector which was offering a way out of some of the country’s financial woes.

In early May, the Reserve Bank of Zimbabwe issued a circular to commercial banks, instructing them to close all accounts of crypto firms within a two-month period and banning crypto trade. With another directive, released on May 17, the central bank ordered the country’s first and leading crypto exchange, Golix, to cease all operations immediately. On the 21st, Golix referred to the High Court requesting the lifting of the ban. The exchange was only granted interim relief, despite previous reports of the ban’s reversal.

The lifting of the restrictions on crypto trading by Justice Alphas Chitakunye did not help Golix a lot, as RBZ’s order for banks and financial institutions to quit dealing with crypto companies remained in place. That pushed the company operating the trading platform, Bitfinance, to look around for other markets. In June, reports came out that Golix is entering three other African countries in an attempt to stay afloat in the aftermath of the crypto ban in Zimbabwe.

Do you agree that central bankers and policy makers should try to learn more about cryptocurrencies before banning them? Share your toughs on the subject in the comments section below.

Images courtesy of Shutterstock, Wikipedia.

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