Zimbabwe’s High Court Suspends Directive Banning Cryptocurrency Trading
Zimbabwe’s high court has suspended a central bank’s directive banning cryptocurrency trading in the country. This after the Reserve Bank of Zimbabwe failed to show up for a case that was filed by Golix, a cryptocurrency exchange platform.
The judge gave the default ruling after the respondents, the RBZ and the governor of the central bank failed to make an appearance, TechZim reports.
In the application, Golix had argued that the central bank did not have the powers to give the directive as it amounted to law-making, a function that can only be performed by the legislature.
“The Respondents are in fact purporting to classify the trade in cryptocurrency as illegal,” the application had said.
The May 14 directive banned all banks from facilitating cryptocurrency related transactions and gave them 60 days to wind up existing arrangements. In the letter the RBZ asked the exchange to take “steps to close the cryptocurrency accounts or ‘wallets’ of your customers and to make good any funds currently held on behalf of customers” trading and investing virtual currencies.”
The RBZ sent a letter a day later ordering Golix to suspend its operations. The platform took down the order book as result. Trading has not resumed as at the time of this writing.
In a statement, the RBZ had raised concerns that the cryptocurrencies could be used to bypass exchange controls and for money laundering. Cryptocurrencies also posed a risk to financial stability, the regulator had said.
Cryptocurrencies have become increasingly popular in Zimbabwe whose currency the Zimbabwean dollar is facing sustained inflationary pressure. Bitcoin trades at a premium as citizens turn to virtual currencies to cushion themselves. Cryptocurrencies are also used to make remittances.
Golix had said it would seek to amicably resolve the issue with RBZ immediately after the ban was announced.