105

Cryptocurrency Regulatory Framework in Zimbabwe

Services Institute (2015), which noted that customers will receive and accept cryp­

tocurrency on an extensive scale only when they acquire improved knowledge and

see better-quality accessibility, consistent cash exchange and inexpensive customer

safety. To this end, the Congressional Research Service (CRS) 2020 further observes

that numerous customers may have a deficiency of knowledge related to cryptocur­

rency and its working.

Criticizers of cryptocurrency have also raised apprehensions that prevailing

laws and regulations do not sufficiently defend customers dealing in cryptocur­

rencies. Simultaneously, supporters of cryptocurrencies advise against over-

regulating expertise, which will produce huge profits. Lastly, if cryptocurrency

turns out to be extensively used, it could influence the ability of central banks to

devise and communicate financial strategy, leading a few reviewers to claim that

central banks should produce their own digital money, while others oppose this

idea (CRS, 2020).

6.5  CONCLUSION AND RECOMMENDATIONS

The study revealed that the barriers and risks cryptocurrency users encounter are the

susceptibility of cryptocurrency to money laundering, the possibility that someone

might hack and manipulate the blockchain ledger, and also price fluctuation of the

cryptocurrency, which does not make it a good medium of exchange; hence the need

for regulation.

6.5.1  Barriers and Risks Encountered in Trading

Using Cryptocurrencies in Zimbabwe

Two main reasons came to the fore regarding risks that affect cryptocurrency users

and why some regulatory intervention may be taken to increase adoption and utiliza­

tion. Firstly, there is a real risk that users face, in that their virtual currencies may be

lost without any form of recourse available due to the decentralized nature of virtual

currencies. A typical case is that of an exchange in the US, MtGox, which filed for

bankruptcy, resulting in cryptocurrency users collectively losing $600,000 worth of

bitcoins. Furthermore, there is uncertainty related to broader acceptance of Bitcoin

and other cryptocurrencies because of such apparent risks. In the present unregu­

lated environment, stakeholders use cryptocurrencies at their own risk. Central

banks, including the RBZ, have generally taken the approach of warning crypto­

currency users against trading in cryptocurrencies but still fall short of implement­

ing mitigatory measures to address these risks. Numerous individuals may be not

comfortable with knowing the risks related to an unfettered cryptocurrency system.

Cryptocurrency guidelines will inspire the broader acceptance of Bitcoin, which is

essential for the related profits and usages of Bitcoin to be completely understood. It

is, therefore, recommended that the government limit the risks and barriers encoun­

tered in trading using cryptocurrencies by implementing appropriate regulation, as

elaborated in Section 6.5.2.