Crypto community welcomes regulation

ZIMBABWE’S cryptocurrency community has welcomed impending legislative changes for the recognition of virtual assets as “securities”, saying this would allow innovation in the financial technology space.

The country currently does not have legislation covering digital assets, a situation that has arrested the development of enterprise around blockchain technology and cryptocurrency phenomena, which have gained traction in other jurisdictions.

In his State of the Nation Address (SONA) last week, president Emmerson Mnangagwa said his government aims to maintain a “responsive and proactive stance to emerging needs of the society by ensuring that the law is a tool for development”.

President Emmerson Mnangagwa

“The Securities and Exchange Act should be amended to widen the definition of Securities to include virtual asset service providers.”
Prosper Mwedzi, who has been trying to push a private digital assets business bill through parliament, said while the legislative changes have been primarily motivated by a need to comply with Financial Action Task Force guidelines, “this is a positive development in that the Securities and

Exchange Commission of Zimbabwe (SecZim) has been tasked to come up with regulations for Virtual Asset Service Providers (VASPs)”.
“This means SecZim will be able to impose rules such as requirements for KYC on exchanges and monitoring and reporting transactions where money laundering is suspected by VASPs,” he told The Financial Gazette this week.

The UK-based lawyer, who is also behind efforts to introduce a cryptocurrency to promote tourism in the country, however, said his private bill is still going ahead.
“It takes longer for the state machinery to kick into action and this is a very technical area both on the technology front and the legal aspects.
“We are prepared to work with regulators to have sensible regulation, which doesn’t stifle innovation. We are prepared for policy makers to adopt the bill and study it,” he said.

Laswet Savadye, the head of the subscriber network at ZIMBOCASH, a start-up pushing for a virtual currency in Zimbabwe, said the development has ignited hope in the crypto community that authorities could be warming up to virtual assets after years of paranoia.
“Since his appointment, the Finance minister gave utterances that pointed to a softening stance and a warming up to cryptos, since the Golix ban. It is a pity that the recently released Fintech Regulatory Sandbox explicitly excluded cryptocurrencies …

“But with the Mthuli Ncube’s recent visit to the DMCC crypto centre in Dubai and the comments by the president during the SONA, we are once again hopeful that the government is indeed intending to move in the right direction.

“As ZIMBOCASH we welcome the president’s commentary on digital assets, as we would like to operate in a regulated environment,” Savadye said.
He said the government should, however, take care to provide a regulatory environment that “strikes a balance between fostering innovation and creativity in the fintech space as well as protecting citizens from unscrupulous players in the space”.
Mnangagwa says the amendments to The Securities and Exchange Act will be complemented by amendments to the Money Laundering and Proceeds of Crime Act.
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