• The Zimbabwean government has initiated a comprehensive study to map and understand the crypto landscape.

• A study will assess the risks associated with money laundering, terrorism financing, and other illicit activities involving cryptocurrencies.

• Zimbabwe seeks feedback from local and international crypto firms to develop a well-informed regulatory framework.

The Zimbabwean government has launched a comprehensive study to regulate the virtual asset industry. This initiative seeks to map and understand the crypto landscape in Zimbabwe, inviting insights from local and international firms.

Zimbabwe Crypto Regulation: Study to Regulate Crypto Industry

On June 12, the Zimbabwe Mail reported that the government had formed a committee to collect data from crypto companies operating within the country. The study aims to provide a detailed understanding of Zimbabwe’s virtual asset industry, including its size and scope. This initiative is expected to bring regulatory clarity to Zimbabwe’s crypto sector.

Nick Mangwana, Zimbabwe’s Permanent Secretary for Information and Publicity, described the study as a ‘comprehensive project.’ He emphasized its goal to offer an in-depth overview of the country’s crypto sector and to serve as a foundation for future regulations.

Mangwana stated, “Firstly, we aim to determine the nature and extent of the cryptocurrency ecosystem in Zimbabwe. This involves mapping out the various actors and activities within the space to get a clearer picture of its scope and scale.“

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Additionally, the study will assess digital assets risks, particularly those related to money laundering prevention and other illicit activities. Mangwana noted, “Our objective is to evaluate the dangers of cryptocurrencies being misused for money laundering, terrorism financing, and other illicit activities. Given the anonymity and decentralization that characterize these digital assets, it is crucial to identify and mitigate any associated risks.”

Consulting Crypto Firms for Tailored Regulation

The government of Zimbabwe is actively seeking feedback on digital asset regulation from crypto firms as it embarks on creating its regulatory framework. The committee is inviting contributions from both local and international crypto firms, with a submission deadline set for June 26.

This consultative approach aims to help officials comprehensively understand Zimbabwe’s virtual asset ecosystem and evaluate the dangers of using cryptocurrencies for illicit activities and money laundering.

Mangwana highlighted the importance of aligning with global trends and best practices in the virtual asset industry. “In line with global trends and best practices, Zimbabwe is embarking on an exercise to assess and understand the crypto-currency (also referred to as virtual assets) landscape in Zimbabwe. The purpose of the exercise is to, among other things, determine the nature and extent of the crypto-currency ecosystem in Zimbabwe. Given the anonymity and decentralization that characterize these digital assets, it is crucial to identify and mitigate any associated risks.”

The government hopes consulting with crypto-focused companies can help create a regulatory framework tailored to Zimbabwe’s needs. This framework will focus on balancing innovation and ensuring the security and integrity of Zimbabwe’s financial system.

Addressing Economic Challenges Through Crypto Regulation

Zimbabwe’s quest to create a robust crypto framework comes as several African countries grapple with turbulent economic situations. Zimbabwe, in particular, is struggling with high inflation, which has severely impacted its economy.

The Reserve Bank of Zimbabwe introduced a gold-backed digital currency called Zimbabwe Gold (ZiG) to address rising inflation despite the warnings of the International Monetary Fund (IMF). This digital currency has been somewhat successful, with the government announcing in October that it could also be used as a payment method.

The issuance of gold-backed digital tokens aims to expand value-preserving instruments in the economy, enhance the divisibility of investment instruments, and widen their access and usage by the public. Zimbabwe has faced challenges with inflation and currency fluctuation for over a decade.

After hyperinflation, Zimbabwe switched to the US Dollar as its official currency in 2009. It reintroduced the Zimbabwe Dollar in 2019 to boost a slowing economy. However, after another cycle of volatility, authorities decided to switch back to the US Dollar to control inflation.

The Reserve Bank of Zimbabwe’s 2024 Monetary Policy statement indicates that the government will recalibrate its monetary policy framework to re-anchor price and exchange rate stability, boosting confidence in the local currency.

“The Bank’s priority policy focus is critical for supporting the economy’s growth prospects through the restoration of stability, convertibility, and transactional convenience of the local currency.”

Africa’s Growing Crypto Adoption

These regulatory efforts in Zimbabwe reflect a broader trend of increasing crypto adoption in Africa. Many Africans use crypto to bypass banking and foreign exchange rate restrictions, and governments are beginning to recognize the benefits of digital assets for their citizens.

Several African nations, including Kenya, are making significant strides in developing the crypto industry, aiming to foster innovation while ensuring the security and integrity of their financial systems.

In conclusion, Zimbabwe’s initiative to map and regulate the virtual asset industry is crucial to establishing a comprehensive regulatory framework. By consulting with crypto firms and assessing digital assets risks, Zimbabwe aims to balance innovation with security, ultimately strengthening its financial system and addressing economic challenges.

This move also aligns with the broader trend of Africa’s growing crypto adoption, highlighting the continent’s potential to become a significant player in the global virtual asset industry.