The Reserve Bank of Malawi (RBM) has warned that digital currencies or cryptocurrencies are not legal tender in the country despite being used as a means of payment or medium of exchange by some Malawians.
RBM Governor Dalitso Kabambe said in a statement yesterday that neither the central bank nor any public institution in Malawi has oversight responsibility over cryptocurrency trade, systems or their intermediaries such as Bitcoin, Litecoin, Ethereum, Zcash, Dach and Rippple, among other numerous forms.
The statement from the central bank comes after one of the victims of cryptocurrencies, who spoke on condition of anonymity, said he lost K1.8 million to a local cryptocurrency trade where he was promised returns in interests weekly.
Reads in part the statement from RBM: “The online and borderless nature of cryptocurrencies means that most of the trading is conducted via systems and platforms that are based outside Malawi. So far, there is no cryptocurrency exchange known to have been registered in Malawi, notwithstanding any trading by its citizenry or local entities on the foreign-based exchanges.
“Members of the public should, therefore, guard against being exploited by ambiguous and unscrupulous schemes, and are
further urged to deal with financial service providers licensed by RBM, which is the sole regulatory authority for financial services in Malawi.”
Unlike notes or coins people use to make transactions, cryptocurrencies largely exist online and are considered an alternative currency.
Locally, one of the victims of cryptocurrencies said after three months of trade, he became suspicious and pounced on the traders, only to discover that the ‘bosses’ fled the country, leaving thousands others clueless on how to get back their money.
Economics Association of Malawi (Ecama) president Chikumbutso Kalilombe said considering that financial literacy in Malawi is at slightly above 30 percent, there is need to do civic education to empower people with information on the cryptocurrencies market.
Cryptocurrencies have emerged as a huge industry worth $230 billion in less than 10 years, but are yet to become a financial standard in the majority of the world, according to information published by The Guardian newspaper in the United Kingdom.
Since the mining of the first Bitcoin block, the ultimate target of the crypto industry is to counter customary finance. With the increase in the number of supporters of Bitcoin, it will still take years before it could mainstream, said the paper.
Currently, Facebook has announced plans to launch its own cryptocurrency, GlobalCoin in early 2020, allowing nearly 2.4 billion monthly users to make digital payments in a dozen countries.