25 May 2018

Zimbabwe: Court Lifts Ban On Cryptocurrencies

Photo: Joe Gratz/Flickr
(File photo)

Cryptocurrency exchange giant, Bitfinance (Private) Limited, which was last week banned from operating in Zimbabwe, will now resume its business with the blessings of the High Court.

High Court judge Justice Alfas Chitakunye provisionally lifted the ban imposed by the Reserve Bank of Zimbabwe following a successful application by Bitfinance, which operates as Golix.

On May 12, the central bank ordered all financial institutions in the country to immediately stop trading or transacting in cryptocurrencies.

Three days later, the RBZ banned Golix from operating and ordered it to shut down its virtual currency exchange business.

Golix was also ordered to close its accounts with various bankers.

The company, through its lawyers, Mutandiro Chitsanga & Chitima Legal Practitioners, challenged the decision through an urgent chamber application at the High Court.

It was argued that RBZ acted contrary to the requirements of administrative law and the Constitution of Zimbabwe.

The lawyers described the decision as unreasonable and unfair.

After convincing arguments by the lawyers, Justice Chitakunye provisionally set aside the ban.

"The ban issued by respondents through letter dated May 15, 2018 against applicant, directing it to cease its operations, shut down its virtual currency exchange business and ordering the closure of its bank accounts with its bankers, be and is hereby suspended pending the return day," ruled Justice Chitakunye.

RBZ registrar of banking institutions Mr Norman Mataruka, in a circular, said the bank's decision was meant to protect the public and safeguard the integrity, safety and soundness of the country's financial system.

The central bank said financial institutions should exit any existing relationships with virtual currency exchanges within 60 days and proceed to liquidate and restitute existing account balances.

RBZ said for the avoidance of doubt, banking services would include maintaining accounts, registering, trading, clearing, collateral arrangements, remittances, payment and settlement accounts, giving loans against virtual tokens.

The bank added that accepting cryptocurrencies as collateral, opening accounts of exchanges dealing with them and transfer/receipt of money in accounts relating to purchase/sale of virtual currencies was also pro - hibited.

Central bank Governor Dr John Mangudya, in a statement, warned the public against trading in cryptocurrencies.

"Any person who buys, sells, or otherwise transacts in cryptocurrencies, whether online, or otherwise, does so at their own risk and will have no recourse to the Reserve Bank or to any regulatory authority in the country," he said.

"The Reserve Bank of Zimbabwe has not authorised or licensed any person or entity or exchange for the issuance, sale, purchase, exchange or investment in any virtual currencies/coins/tokens in Zimbabwe. Exchanges such as Bitfinance (Private) Limited (Golix) and Styx24 are not licensed or regulated by the Reserve Bank."

He said the Reserve Bank would continue to closely monitor regional and global cryptocurrency developments in order to inform policy direction.

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