While some parts of the world with highly developed financial systems and technologies actively promote the significance of rising cryptocurrencies and their unique benefits such as payment independence, anonymity or low processing fees, it appears that markets in Africa are slowly regressing and the latest example of such scenario happened in Zambia on October 12th.
In other words, The Central Bank of this landlocked country in East Africa has pronounced cryptocurrencies such as Bitcoin illegal tender, as digital transactions carry no guarantee in the case of market failure. Although the bank has issued a decree primarily to promote the country’s national money, called the ‘kwacha,’ it will still need legal backing of the parliament to amend the law.
The bank has even gone a step further, and issued a statement to warn people who trade cryptocurrencies that all transactions from now on will be done at their own risk. Since there is no regulatory authority to mediate in the event of theft or fraud, virtual assets are simply not a commodity within Zambia’s borders.
Chibamba Kanyama, a business leader, writer and economist commented:
“The crypto market developed well after the BoZ Act was instituted and there has been no effort on the part of government to revise it. Even if the act was revised, the bank would end up being publicly liable for something that is outside its domain. This means the BoZ is in order to provide this disclaimer and guidance to the Zambian market.”
Additionally, the Zambian financial regulator said that cryptocurrencies carry an enormous risk of money-laundering, referring not only to financial scams but terrorism as well. On the one hand, the bank stated that such claims are not based on its own investigations, but general consumer disatisfaction based on hacking and frauds.
Although the country lacks a legitimate digital currency exchange, most residents purchased their virtual coins via a peer-to-peer connection or from global online exchanges, mainly using bank cards.
Due to the sense of worsening economic awareness in the state, which is encouraging people towards alternative trading units such as BTC, Zambians are seeking profitable investments with high interest such as those found in offshore accounts, added Kanyama. The crypto market is attractive to investors, yes, but civil servants and retirees are also looking for a way to reinvest, explains the economist.
Source:
“Zambian Central Bank Declares Bitcoin Is Not Legal Tender”, Jeffrey Gogo, bitcoin.com, October 14, 2018.