Reserve Bank of Zimbabwe Defends Ban On Cryptocurrencies

Here is the latest chapter in the Golix vs RBZ (Reserve Bank of Zimbabwe) saga. The RBZ filed its opposing application with the courts.

Summary of how we got here: the RBZ banned the trading of cryptocurrencies, ordered banks to freeze Golix’s accounts and then ordered Golix to cease operations. Golix sued and got an interim relief. The case is in the courts and on Friday the 8th of June, the RBZ filed an opposition application defending its ban and challenging the interim relief.

The central bank disputes Golix’s case that they acted outside of their authority in issuing the ban. They say the Banking Act gives them the authority:

The Banking Act gives the Bank [RBZ] the powers to supervise banks and prescribes a variety of supervisory actions that the bank may take as a measure to correct any conduct that may be a threat to the smooth operation of the banking and financial sectors. It is as a result that the Bank directed banks not to deal with the applicant (Bitfinance (Pvt) Ltd) as the latter’s activities were not only unregulated and illegal, but presented all kinds of risk, including but not limited to fraud, money-laundering, evasion of the country’s exchange, terrorism financing.

The Reserve Bank rips further into Golix and gives an explanation as to why they say the cryptocurrency exchange was operating illegally. The RBZ’s interpretation of the Banking Act is that Golix was engaging in banking activities. It then becomes illegal because they do not the required licence to operate as such. So in the RBZ’s eyes, Golix was operating unregulated and illegally.

You might recall that Golix was in the process of preparing an ICO (Initial Coin Offering) when the ban was effected. The RBZ classifies that ICO as a pyramid scheme because Golix would access the public’s funds without tangible security or even the ability to refund the subscribers on demand.