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Bitcoin is Not a Legal Tender in Zambia, Says Central Bank

Last Updated March 4, 2021 3:48 PM
Yashu Gola
Last Updated March 4, 2021 3:48 PM

Zambia’s central bank has said that cryptocurrencies like bitcoin aren’t legal tender in the country.

The Bank of Zambia (BoZ), responsible for creating and implementing monetary policies for the world’s 105th largest economy, explained their stance against the use of cryptocurrencies in contrast to the growing public interests in the field.

The central bank admitted that it was receiving a lot of inquiries related to Bitcoin’s legal status in Zambia, and they had to “safeguard the interests of members of the public and to maintain the integrity of the financial system” with its official stance on the digital currency, according to a local news report .

Constitutional Barriers

BoZ cited references from their financial constitutions, naming Section 30 as the main barrier that keeps Bitcoin and similar digital assets from having a legal tender status. Also, the bank agreed that they had no constitutional power to disfigure or ban the local crypto market under the existing legal framework. Excerpts:

“Firstly, Section 30 of the Bank of Zambia Act vests the right to issue notes and coins exclusively in the BoZ. To date, BoZ has not issued any form of cryptocurrency. Cryptocurrencies are not legal tender in the Republic of Zambia; Secondly, BoZ does not oversee, supervise nor regulate the cryptocurrency landscape. Consequently, any and all activities related to the buying, trading or usage of cryptocurrencies are performed at owner’s risk.”

Adding further, BoZ issued a public-interest warning identical to those released by its international peers in the past. The bank said that the investors should be aware of the risks associated with the use of cryptocurrencies. It added money laundering, consumer protection (related to hacking and fraud), and terrorism financing to its statement, reminding that they will not be able to offer any legal recourse to crypto users if they get subjected to any of such online crimes.

Regulation in Cards

The constitution of Zambia does not define Bitcoin, which is why it has received a flack from the country’s central bank. There is, however, a possibility of lawmakers taking an active approach to regulating it under a modified provision. BoJ confirmed that it would be actively looking into the cryptocurrencies to come up with a law that “should not constrain but enable innovation.”

As of now, the Zambian crypto community does not constitute any substantial trading activity to the global crypto volume. The country does not have an active local exchange, and the local crypto traders mostly rely on either foreign crypto exchanges or peer-to-peer desks to conduct their transactions. It might be due to the lack of crypto education in a country where only 11.6 percent of people have an internet connection, according to a World Bank report.

Victoria falls, Zambia image from Shutterstock.