I believe cryptocurrencies are the future because of the powerful characteristics that they wield. However, it seems some governments have been heavily opposed to their adoption whilst some have embraced them. Sometime last year the RBZ issued a statement directing local financial institutions to not process cryptocurrency transactions. Not forgetting in 2017 when the RBZ took Golix (a Bitcoin trading company) to court. When the RBZ lost that court case that is when they issued the ban I was talking about earlier. I am not quite sure whether this was borne out of their lack of full understanding on what cryptocurrency is or they probably know what it really is. If they really know what it is then it actually makes sense why they would bar them. One of the attributes of cryptocurrencies is that they eliminate the need for excessive money printing and promote a fixed money supply. Without getting too political I will let you conclude the rest. Anyways, let us look at what the RBZ recently said:
2019 Mid Term Monetary Policy Statement – Transition To Normalcy
In the recently issued statement, the RBZ mentioned something about cryptocurrencies. It read as follows:
In addition, an Interagency Fintech Working Group (IFWG), comprised of technical staff across government line ministries, government departments and regulatory agencies, as well as relevant stakeholders, was constituted. The IFWG is supported by the following thematic working committees:
- a) Legal/Regulatory;
- b) Crypto Assets and Digital Currencies;
- c) Innovation/Technical; and
- d) Consumer Protection.
From that, it seems the central bank is now looking into cryptocurrencies and possibly regulating their use in the near future. Actually, in most countries (even the developed ones) the issue of regulating cryptocurrencies has always been the most topical.
Regulation Of Cryptocurrencies – A Topical Issue
Cryptocurrencies are not your typical area of monetary issues such as fiat currencies. You might probably wonder why but let me briefly explain the principal concept behind the formation of cryptocurrencies from the onset. Ideologically, the working principle behind creating cryptocurrencies was two-tier namely, no third-party involvement and no external interference. Just by looking at those two elements it becomes clear that the RBZ would not have the regulatory power that they want to exercise over local cryptocurrency use. The moment there is an oversight or external inference from, in this case, the RBZ, the principal attributes of cryptocurrencies get compromised somehow.
However, some people do have issues with the whole aspect of not having any regulation in place. So we have two sides which both seem noble but are at loggerheads i.e. cryptocurrency works best without regulation (in fact the birth of cryptocurrencies stemmed from a deliberate avoidance of regulation). Then the need for regulation is theoretically noble but it stifles the potency of cryptocurrencies especially considering why they were developed, to begin with.
So Is Regulation A Good Idea? – The Case Study Of Japan
This question is fundamental because locally it seems to be the single most significant factor slowing down the mainstream use of cryptocurrencies. Japan is a perfect example where regulation has been put in place with quite sterling results. In fact, Japan is now attributed to the biggest chunk of trading in Bitcoin worldwide. In the same nation, over 3 million are now actively involved in trading in cryptocurrencies. Over and above that, at least a quarter of a million stores in Japan now accept Bitcoin as a means of payment. So I believe there is a lot to learn from the example of Japan because it seems the putting together of a regulatory framework has actually optimized the use of cryptocurrencies in that nation.
Which Is Which Then?
Some experts are suggesting that people should not shun regulation of cryptocurrencies. There is a sense in that but I believe the proposed regulatory frameworks must be heavily scrutinized first. On the other hand, the moment there is the talk of regulation it means there is room for the government to embrace cryptocurrencies. Some argue that if people shun cryptocurrencies then governments can simply ban the cryptocurrencies meaning it would be better to consider being regulated. How the regulation is built is also premised on a lot of debatable issues no wonder regulation of cryptocurrencies is a topical issue. Some governments do not fully understand cryptocurrencies whilst others do but are not keen on adopting them because they annihilate unethical financial practices such as unchecked money printing. Looking at the root problems of this nation at the moment, cryptocurrencies are definitely an answer.