Cryptocurrency unstoppable: Mthuli

Zimbabwe is ready to soften its hardline position on cryptocurrencies, at least judging by Finance and Economic Development Minister Professor Mthuli Ncube’s remarks this week, that he intends to develop a framework and rules that govern formal trading in asset classes of the digital money.

According to Investopedia, a cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralised networks based on blockchain technology — a distributed ledger enforced by a disparate network of computers.

A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.

Blockchains, Investopedia says, which are organisational methods for ensuring integrity of transactional data, are an essential component of many cryptocurrencies.

Many payment platforms that include Bitpay, Square and Paypal have reportedly started accepting payment in Bitcoin, the most common crypto globally and other later versions of cryptocurrencies.

These digital currencies have become easily tradable on many established platforms.

However, in 2016 the Reserve Bank of Zimbabwe directed the country’s financial institutions to stop processing transactions involving cryptocurrencies, indicating the monetary authorities considered Bitcoin and digital to be forms of “money laundering and criminal activity”.

But the minister recently indicated possible softening of the country’s position on the digital monies after tweeting on his blog that he had visited a place called DMCC in Dubai, calling it a fascinating incubation hub for cryptocurrencies and payments solutions. Minister Mthuli remarked that he came across a solution that could reduce the cost of
Diaspora remittances, expected to reach US$1 billion this year.

And on Tuesday this week, during his presentation to Zimbabweans in Dubai, United Arab Emirates (UAE) and the rest of the Gulf region, the minister revealed the country’s readiness to make concessions on cryptocurrency, which could open the gateway to their full embrace.

The Treasury chief, speaking about investment opportunities in Zimbabwe, said it was impossible to run away from cryptocurrency.

“But our view is that we do not want it to be a currency. Want this to be an investment class. So . . . through the Victoria Falls Stock Exchange platform, we will try to create crypto-based products there, which are ring fenced within the offshore zone.

“We have taken the first step already and created a sandbox, at the Reserve Bank of Zimbabwe (RBZ), where the idea and everything else is being tested in a safe regulated environment where it will then migrate to this safe Victoria Falls environment.

“I was actually quite surprised, I think easily, 30 percent of our youth Vice President (Chiwenga) are invested in crypto, easily. It is actually unstoppable, but the idea is to then regulate it properly; create a safe environment for everyone,” Minister Mthuli.
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The minister is part of a delegation of five Cabinet ministers accompanying Vice President Chiwenga to the Global Business Forum, held on the sidelines of Expo 2020 Dubai. GBFA ended yesterday. Others are Industry and Commerce Minister Dr Sekai Nzenza, Mines and Mining Development Minister Winston Chitando and Tourism and Hospitality Industries Minister Mangaliso Ndlovu.

He said the Ministry of Finance was working with a Dubai-based investor to create or develop a crypto index. This required the Treasury to first do weights.

“But how do you weight a crypto product? So, you rate it and each rating corresponds with a weight.
“So, once we have the weights of the various crypto assets arising from rating, we can then create an index; on the back of the index, you can then create a crypto ETF (exchange traded fund).

“That is what we are looking at and some investors are working with us to create the exchange traded funds; it’s up to the investors to do that, our job is to support. “But we invested a lot in trying to understand it; so that is where we are heading in terms of cryptocurrencies,” Minister Mthuli.-eBusiness Weekly