TL;DR,

• Zimbabwe crypto regulation study launched June 12 with committee collecting data from local crypto companies, submission deadline June 26, aiming to map ecosystem and address money laundering risks.
• Government seeks comprehensive understanding of virtual asset industry through consultative approach, inviting both local and international firms to contribute to upcoming regulatory framework.
• Facing ongoing economic instability, Zimbabwe sees a regulated crypto and digital asset market as a potential lifeline to restore its financial pillars and combat inflation.

Zimbabwe’s crypto regulations are gearing up for a new draft, with the government launching a comprehensive study to regulate its virtual asset industry. Their main focus is to create a comprehensive map inviting insights from local and international firms.

Zimbabwe Crypto Regulation: Study to Regulate the Crypto Industry

On June 12, Zimbabwe’s government announced a committee dedicated to collecting data from crypto companies operating locally. Nick Mangwana, Zimbabwe’s Permanent Secretary for Information and Publicity, described the study as a ‘comprehensive project.’ He emphasized its goal of offering an in-depth overview of the country’s crypto sector and serving 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.

The committee will also gain insights into various risk factors associated with digital assets. 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

Cooperation is the centre of this initiative, with the governments calling for firms to participate in drafting its upcoming digital asset framework. The committee is inviting contributions from both local and international crypto firms, with a submission deadline set for June 26.

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This consultative approach equips officials with a comprehensive understanding of Zimbabwe’s virtual asset industry.

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 cryptocurrency (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 our ecosystem. Given the anonymity and decentralization that characterize these digital assets, it is crucial to identify and mitigate any associated risks.

The government hopes to create an adaptive digital asset framework. Balancing innovation and security is an ideal goal for most regulatory; however, achieving it requires constant revision.

Combating Economic Instability Through Digital Innovation

A core drive behind developing new Zimbabwe crypto regulations is combating inflation. The region has a history, given its unstable economy.

The Reserve Bank of Zimbabwe introduced a gold-backed digital currency called Zimbabwe Gold (ZiG currency) to address rising inflation despite the warnings from the International Monetary Fund (IMF). The gold-backed 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 the ZiG currency 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. This approach would later change in 2019 through the Zimbabwe Dollar. However, little change occurred, and authorities switched back to control inflation.

According to the Reserve Bank of Zimbabwe’s 2024 Monetary Policy statement, the government is recalibrating its monetary policy to re-anchor prices and find some form of stability.

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.

Laying the Foundation for a Balanced Financial Future

In Africa, the main selling point for crypto is utility rather than value. For many locals, its ability to bypass long banking processes, foreign exchange rate restrictions, while also offering yield growth is a golden ticket. Many governments have recognized these benefits and have cracked down on accommodating them.

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Kenya, South Africa, Mauritius and Seychelles are among the few ecosystems whose official authorities actively try to accommodate digital assets. The financial sector is evolving, and decentralized finance providers are offering faster alternatives.

Zimbabwe’s goal is clear: to restore its economic pillars. Previous attempts with its fiat currencies have failed, leaving only blockchain as a lifeline. A clear digital asset framework opens more doors in incorporating local talent while attracting international investment.