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Cryptocurrency Regulatory Framework in Zimbabwe

environment cannot stop the acceptance frenzy that has been triggered by Bitcoin/

cryptocurrencies. There is indeed a growing and irresistible interest in embracing

this new technology, with most businesses taking the lead (Yazbeck, 2007; CGC,

2019). Zimbabwe’s economy is quite unique, with its monetary system having col­

lapsed twice in a space of two decades. In this vein, cryptocurrencies present a com­

pelling option that may meaningfully address the current cash crisis, which has been

a strong catalyst in the use of electronic money such as Point of Sale machines and

mobile money technologies. Against this background, it is important to question

and interrogate whether cryptocurrencies can be a relevant option given an enabling

regulatory environment. Pursuant to answering these questions, the main purpose of

this chapter is to proffer regulatory solutions that would encourage and promote the

adoption and use of cryptocurrencies in Zimbabwe. This was achieved by investi­

gating the risk factors of cryptocurrency usage and proposing mitigatory measures.

The study adopted a mixed methods approach to investigate this phenomenon.

Quantitative data collection tools were primarily used to collect data on the adoption

and utilization of cryptocurrency currencies, while qualitative data was extracted

from key informant interviewees (KII), focusing more on interrogating best prac­

tices in regulating cryptocurrencies.

6.2  LITERATURE REVIEW

6.2.1  An Overview of Cryptocurrency

A cryptocurrency, also known as a “digital currency” or “virtual currency”, is a

symbol in a distributed consensus ledger (DCL) that signifies a component of an

account. A cryptocurrency is gained, deposited, utilized and executed by elec­

tronic means. It enables peer-to-peer exchange without a third-party intermediary

(Accenture Consulting, 2017). Cryptocurrency is not exchangeable with any other

service, like gold, though cryptocurrency has no physical form and is not supported

by any legal organization. Furthermore, its supply cannot be analyzed by any bank,

and it has a decentralized network system, where every transaction is carried out by

the users (PwC August, 2015). For a digital currency such as cryptocurrency to oper­

ate, it requires a platform such as blockchain (PwC March, 2018). A blockchain is a

distributed ledger technology (DLT) that permits data to be kept on servers univer­

sally while allowing anybody on the network to perceive everybody else’s real-time

entries, which enables participants to confirm transactions without the need for a

central certifying authority (PwC May, 2017).

6.2.2  Cryptocurrencies and Capitalization

The inception of Bitcoin in 2009 has since triggered the emergence of over 1,600

other cryptocurrencies (Hileman and Rauchs, 2017). According to coinmarketcap​.

co​m, a website dedicated to monitoring the Bitcoin ecosystem, as of 1 May 2018,

1,593 different cryptocurrencies were in existence with a total market capitalization

of USD 382,816,049,760. The majority of these cryptocurrencies are anchored by the