Towards a Regulatory Framework for the Adoption and Use of Cryptocurrencies in Zimbabwe

Abstract

Bitcoin was first introduced in the year 2008 through a white paper by a pseudonymous programmer, or group of programmers, known as Satoshi Nakamoto. During its short existence, it has grown in value at a phenomenal rate, peaking at 1 bitcoin being the equivalent of almost 20000 USD, and in the process inspiring thousands of other cryptocurrencies. Zimbabwe, as part of the global village, has not been spared this frenzy. Like all emerging technologies, they come with risks and benefits. The adoption of cryptocurrencies in Zimbabwe remains low due to scepticism emanating from a number of Ponzi schemes and pyramids. At one time, cryptocurrencies were deemed illegal and banned in Zimbabwe, which dealt a fatal blow to the sector’s growth. However, the current Minister of Finance (2018 to 2021) has a great interest in digital currencies, arguing that Zimbabwe should take advantage of the knowledge young people have about cryptocurrencies and come up with conducive regulation for the sector to thrive. The most obvious challenge that cryptocurrencies like Bitcoin would solve in Zimbabwe is doing away with cash shortages, which are taking their toll on the economy. This study sought to proffer regulatory solutions that would encourage the adoption and use of cryptocurrencies in Zimbabwe. A varied methods technique was utilized, in which quantitative data was collected on the adoption and utilization of cryptocurrencies, whilst qualitative data interrogating best practices in regulating cryptocurrencies was collected. SPSS was used to analyse statistical data whilst thematic analysis was applied to the qualitative data. The findings revealed that the 26–45-year-old age group accounts for the vast majority of cryptocurrency adopters. Major factors driving the adoption include cross-border remittances and payments, while factors working against adoption include lack of understanding and legal recourse for dispute resolution. Recommendations include the recognition of cryptocurrencies as digital tokens as well as regulating the operations of virtual currency exchanges in Zimbabwe. The government should also educate the general public on the use, benefits and risks of cryptocurrencies.