Central Bank Lacks Legal Backing to Completely Ban Cryptocurrency
The Bank of Zambia (BoZ) understands that it neither has the power nor the legal backing to shut down the nascent cryptocurrency market in the southern African country. It would need parliament to amend the law that enabled its establishment for BoZ to be able to claim any authority over cryptocurrency investments or trading.
“The bank has no legal provision for regulation of the (digital currency) market,” Chibamba Kanyama, a Zambian economist, told news.Bitcoin.com. Kanyama said: “The crypto market developed well after the BoZ Act was instituted and there has been no effort on the part of government to revise it. Even if the act was revised, the bank would end up being publicly liable for something that is outside its domain. This means the BoZ is in order to provide this disclaimer and guidance to the Zambian market.”
On Friday, the Zambian central bank issued a statement warning people using or trading cryptocurrency that they were doing so at their own risk and would have no recourse to any regulatory authority in the event of theft or fraud. It said that though bitcoin and other cryptocurrencies retained “some monetary characteristics, such as, being used as a means of payment on a person to person basis, cryptocurrencies are not legal tender in Zambia.”
he Bank of Zambia, which joins a long list of African central banks to warn against crypto, said it felt compelled to speak because of observable rising public interest in virtual money. It also intended “to safeguard the interests of members of the public and to maintain the integrity of the financial system.”
Bitcoin’s often wild swings have not endeared it to global financial gurus steeped in tradition. But it was largely a measured and cautious statement by the BoZ, a central bank keen on reasserting its relevance in an economy battered by high foreign debt and a declining local fiat currency.
Cautious Zambian Central Bank Warns on Bitcoin, as Investors Start to Swell
The kwacha, recalibrated in 2012 with the removal of three zeroes, has been in free-fall over the past few months. In September, the currency nearly touched a three-year low when it traded at 11.025 against the United States dollar, in a development that induced panic in local markets.
“Regulation should not constrain but enable innovation,” said the BoZ, clearly wishing to avoid the examples of neighboring Zimbabwe and Namibia, which have altogether banned cryptocurrency. “[We] will continue to actively monitor all developments [in the crypto markets],” it said.
What do you think about the reaction of African central banks to cryptocurrency? Let us know in the comments section below.
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Bitcoin price VOTE OF CONFIDENCE: Cryptocurrency as 'stable as dollar and oil' markets
BITCOIN and other major cryptocurrencies have been given a massive vote of confidence by new research published in a renowned scientific journal, which argues the digital assets have matured and could soon be as reliable as physical money.
The crypto market is notorious for its volatility and large swings in price.
In 2017 alone, Bitcoin’s value rocketed to more than double its value, reaching a high $19,783 in December, before then crashing to less than $6,000 by June this year.
But now, new research published in the journal Chaos: An Interdisciplinary Journal of Nonlinear Science, suggests investment in the digital asset may be more reliable than previously thought.
In a report titled “Bitcoin market route to maturity? Evidence from return fluctuations, temporal correlations, and multiscaling effects,” researchers explain Bitcoin is following some of the same trends of the market as physical currencies.
“But when we took a closer look at the data, suddenly it turned out that this crookedness originated from the first two years of the analysed period, that is, from the time when the market was just starting to shape itself.
“Later on, the rates of return fluctuated according to the inverse cubic law.”
Cubic law refers to a method of judging a market’s maturity.
Analysts plot price changes in one-minute sequences and compare how they match up.
Bitcoin is showing the same fluctations as the stock, dollar and oil markets (Image: GETTY)
The authors of the new research looked at Bitcoin’s price between 2012 and April 2018 to determine that despite early irregularities, the market has become more mature is recent years.
They added Bitcoin’s maturity was “particularly evident in the last six months of the examined period”.
In another sign likely to please investors, the researchers said Bitcoin acted with the functions of fluctuations in rates of return as “regular, mature markets, such as the stock, dollar, oil or bond markets”.
However, not everyone agrees with the suggestion Bitcoin is a worthy investment.
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Treasury Committee Chair Nicky Morgan has labelled the burgeoning world of cryptocurrency investment as a “wild west” industry.
She said: “Bitcoin and other crypto-assets exist in the Wild West industry of crypto-assets.
“This unregulated industry leaves investors facing numerous risks.
“Given the high price volatility, the hacking vulnerability of exchanges, and the potential role in money laundering, the Treasury Committee strongly believes that regulation should be introduced.”