Banned Bitcoin

Zimbabwe Moves to Ban Bitcoin

Count the African nation of Zimbabwe among the latest countries to ban bitcoin-based transactions and other transactions denominated in digital currencies.

The country’s central bank says bitcoin transactions are risky and could destabilize the country’s already fragile financial system.

“Financial regulators around the world have identified the dangers and risks presented by virtual currencies to financial stability which include risk of loss due to price volatility, theft or fraud, money laundering and other criminal activities. Further, cryptocurrencies can be used to facilitate tax evasion as well as externalization of funds in violation of a country’s laws,” according to a statement issued by the central bank.

Why It’s Important

While Zimbabwe does not often come to mind as a major cryptocurrency market on par with the U.S., China or Japan, the African country is indeed an important market for alt-coins. Due to some of the world’s highest inflation and a local currency that has essentially been devalued, many Zimbabweans have turned to bitcoin and other cryptos in lieu of the local currency.

That has made Zimbabwe one of Africa’s most vibrant digital currency markets.

The central bank’s announcement “has thrown the country’s leading crypto currency exchange platform, Golix, into disarray. It has halted its planned token sale to raise $32 million under an initial coin offering (ICO) aimed at generating funds to expand across Africa,” reports Quartz.

Zimbabwe monetary authorities have also proven impotent at stemming inflation and keeping the local currency from plunging. The country’s benchmark interest rate is 9.39%, among the highest in the world, but even that has not prevented locals from adopting digital currencies in significant fashion.

“For the avoidance of doubt, banking services include maintaining accounts, registering, trading, clearing, collateral arrangements, remittances, payment and settlement accounts, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of virtual currencies,” said the Reserve Bank of Zimbabwe (RBZ).

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Banned Bitcoin

Iran is Latest Country to Ban Banks From Dealing in Crypto

Iran is the latest country to ban its bank from dealing in cryptocurrencies. Citing concerns regarding money laundering, Iran’s central bank said it is prohibiting that country’s domestic financial services firms from dealing in digital currencies.

“All branches of banks, credit institutions and currency exchanges should stay clear of any sale or purchase of these currencies and avoid undertakings that facilitate or promote such currencies,” the official Islamic Republic News Agency reported, citing the Central Bank statement. “Action will be taken against those who contravene the regulations.”

The rial, Iran’s currency, has been struggling this year and the central bank there has been stepping up efforts to shore up the rial and its currency markets. Interestingly, Iran previously bandied about the idea of introducing its own digital currency.

“Banks, credit institutions and currency exchanges all now have to avoid any sale or purchase of digital currencies,” reports the BBC.

Not The Only One

Iran is not the only country to announce a crypto ban or to take steps to increase regulations of digital currencies.

Earlier this month, the Reserve Bank of India (RBI) said it is banning that country’s banks from dealing in digital currencies.

“In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling [virtual currencies],” said RBI, India’s central bank, in a statement.

Additionally, several major Canadian banks have announced restrictions on crypto transactions or outright bans of those transactions. Regulators in Chile recently blocked the bank accounts of several major crypto exchanges operating there.

“In Iran, the central bank had in recent months asked Iranians to avoid turning to cryptocurrencies including Bitcoin, describing them as ‘unreliable,’” reports Bloomberg. “But this week’s announcement is a more drastic move and coincides with authorities working to control both the official and unauthorized currency markets.”

Adoption

Whoa Canada: Country’s Banks Ban Crypto Transactions ??

Count Canada among the countries taking a heavy-handed approach to dealing with cryptocurrency transactions. The Bank of Montreal (BMO), one of the largest Canadian banks, recently said it is banning customers from purchasing digital currencies with its MasterCard credit and debit cards. BMO rival TD Bank made a similar announcement last month.

“The decisions follow moves by several U.S. banks to stop allowing credit card purchases of bitcoin and other cryptocurrencies,” according to BNN.

The Royal Bank of Canada (RBC), that country’s second-largest bank, said it will permit cryptocurrency transactions under limited circumstances. RBC “also cautioned clients about the possibility of a sudden drop in the value of cryptocurrencies which ‘could expose them to substantially higher debt levels than they are able to repay,’” reports the Globe And Mail.

The Bank of Nova Scotia (BNS), the other one of Canada’s big four banks, is also reportedly reviewing its policies on digital currency transactions.

Central Bank, Too

Earlier this year, the Bank of Canada (BoC), that country’s central bank, said it is examining increased regulations on cryptocurrencies.

In a January interview with CNBC, BoC Governor Stephen Poloz said bitcoin trading is “gambling” and that cyrptocurrencies are not traditional assets.

“I’m not really sure what they are. They are not assets really … I suppose they are securities technically … There is no intrinsic value for something like bitcoin so it’s not really an asset one can analyze. It’s just essentially speculative or gambling,” Poloz said to CNBC.

Cryptocurrencies are no strangers to central bank controversy. Last week, the Reserve Bank of India (RBI) said it is banning that country’s banks from dealing in digital currencies.

A petition circulating in India to compel RBI to reverse its decision has gained nearly 20,000 signatures.

Last year, the leader of Denmark’s central bank called bitcoin trading “deadly.” While many central banks have been critical of cryptocurrencies, they are also expected to be adopters of blockchain technology in the years ahead and some market observers believe central banks could eventually issue their own digital currencies.