• Zimbabwe is exploring legalizing crypto payment services in addition to crypto-based ETFs.
• Top officials say the challenges include deficient regulatory clarity, money laundering, and other crypto-propagated criminal activities.

Zimbabwe is researching ways in which cryptocurrencies can be legalized for payment services, according to a top official cited in a local news report.

Notably, the nation is seeking the opinions of businesses and citizens on the same, said retired Brigadier Colonel Charles Wekwete at a Computer Society of Zimbabwe summit. Additionally, he noted that global authorities are still exploring policy development when it comes to crypto assets. The implications of taking up digital currencies remain vague since they are a “fundamental departure from previously known financial instruments,” he added.

More so, Wekwete, who heads the e-government technology unit, said huge concerns have risen over unregistered cross-border transfers. Zimbabwean regulators, like many other similar officials worldwide, are struggling to combat crypto-enabled money laundering and illicit flow of funds. This has delayed the adoption of digital assets for fear of propagating criminal activities.

“So the government has put in place a mechanism to try and gather views from various sectors of society to eventually formulate policies,” he said.

Sooner or later, (the) government will make statements, but we have not gotten there yet. The consultative process is already underway,

Zimbabwe and the crypto industry

According to blockchain intelligence platform Chainalysis, cryptocurrency adoption in Africa had surged 1,200 percent between September 2020 and September 2021. Thereby placing the continent as the third-fastest growing crypto economy in the world. People favor the coins since they take away the hustle of dealing with a bank, especially to those whose banking access is limited or non-existent. Cryptocurrencies also do away with the restrictions such financial institutions and governments impose on people.

Additionally, the Chainalysis 2021 report ranked Zimbabwe as the 61st country leading in crypto adoption globally. Other African nations leading in crypto penetration are Kenya, South Africa, Nigeria, and Tanzania.

Due to the risks surrounding illicit activity, however, the nation’s central bank halted transaction processing in digital currencies in 2016. An alteration in policy is nonetheless, likely to take place in the future after the nation’s finance minister acknowledged cryptocurrencies. Digital currencies are “unstoppable,” Mthuli Ncube asserted, adding that 30 percent of Zimbabwean youth had already placed investments in digital currencies.

But even then, regulation as Ncube says is vital. The country is currently working alongside investors in developing crypto-based exchange-traded funds (ETFs).

These developments come following El Salvador’s September adoption of Bitcoin as legal tender. The Latin American country did this with the hope of bettering its impoverished and inflation-riddled economy. El Salvador’s president Nayib Bukele announced last week that proceeds obtained from its Bitcoin stash are being put into building 20 schools and a pet veterinarian.

Similarly, Zimbabwe has a history of poor monetary policy and is one of the severe cases of hyperinflation in the world. No major declarations on cryptocurrencies have been made so far, but Wekwete says consultations are underway