Zimbabwe’s newly introduced foreign currency regulations threaten peer-to-peer bitcoin trading via messaging apps in the country.
The Zimbabwean economy – which has been hit by hyperinflation – endures an ongoing shortage of foreign currencies. Authorities blame illegal foreign currency dealers for exacerbating the situation thus hastening the fall of the local currency. Several regulations have been introduced in the past few months to arrest the situation.
A recent directive by a unit within Zimbabwe’s central bank to outlaw advertisements relating to foreign currency trading has sparked off a panic within Bitcoin trading communities.
The latest decision comes in the wake of a sharp depreciation of the Zimbabwean dollar against the US dollar. Economists blame the country’s biting foreign currency shortages for the local currency’s free fall.
The central bank has pegged the exchange rate at 1 USD for every 25 Zimbabwean dollars towards the end of March. However, the black market rate is now 1:80 or higher.
Financial Intelligence Unit Onslaught
On June 15, the Financial Intelligence Unit (FIU) of the Reserve Bank of Zimbabwe circulated a document that is threatening to freeze bank and mobile money accounts of those caught putting up any advertisements relating to foreign currency trading in social media chat groups.
The FIU alleges it is aware that some WhatsApp groups have mushroomed for the specific purpose of promoting and facilitating ‘illegal’ foreign currency dealings.
Parts of the statement reads:
“The FIU, in collaboration with the police, banks, mobile money/mobile money service providers and relevant regulatory agencies, has embarked on an exercise to identify and take action against individuals who create, advertise on or participate (actively or passively) in WhatsApp groups or other platforms for illegal foreign currency trading.”
The statement goes on to list the steps authorities will take against those caught on the wrong side of these regulations.
Panic in Crypto-Related Chat Groups
Some within the cryptocurrency trading communities have suggested that this directive encompasses bitcoin trading as well. Bitcoin trades, just like with the so-called foreign currency black-market trades, are often initiated in social media chat groups.
Moreover, bitcoin-to-fiat trading is typically conducted in foreign currencies like US dollars. Although, there are trades where local mobile money is the preferred method of payment.
Consequently, some traders are now taking precautions by replacing their local WhatsApp phone numbers with foreign ones. The use of foreign phone numbers helps to masks the real identity of traders and their bank accounts from being targeted.
Yet others are adamant that bitcoin—which the central bank has not recognised as currency—is, in fact, a digital asset. As such, it is exempt from the FIU directive. However, the broad terms used in the FIU statement suggest authorities are trying to go after all platforms where foreign currency is exchanged.
Still, others are not overly worried insisting that FIU lacks the capacity to achieve this kind of surveillance and policing. In any case, they say Whatsapp messages are protected with end-to-end encryption.
BitcoinAfrica.io reached out to FIU to get clarification on the some of the issues raised by bitcoin traders. However, we did not receive a response at the time of publishing.
No Crypto-Specific Regulation
Zimbabwe, just like many of its counterparts on the African continent, does not have regulations that specifically govern cryptocurrency trading. The country’s central bank has in the past issued press statements advising the public against dealing in cryptocurrencies.
At the same time, it banned financial institutions from facilitating the movement of funds between fiat to crypto and vice versa. These decisions culminated in the shutdown of Golix, a cryptocurrency exchange in 2018.
However, since then there has been an apparent rapprochement by the central bank concerning its blockchain technology. For instance, in its last monetary policy statement, monetary authorities again touted the potential of blockchain technology. They even encouraged financial institutions to adopt this.