THE Reserve Bank of Zimbabwe (RBZ) and its governor John Mangudya have been taken to court by a local cryptocurrency exchange dealer, Bitfinance (Pvt) Ltd trading as Golix, which is seeking an order to nullify the recent pronouncement by the central bank banning all transactions in digital currencies.
Bitfinance deputy chief executive officer William Chui filed an urgent chamber application on Monday, arguing that the RBZ has no jurisdiction to effect the ban given that cryptocurrency transactions are not regulated by the central bank, which simply regulates the banking sector and the country’s currency.
“This is an urgent chamber application for setting aside the decision by the first respondent (RBZ) to ban operations of the applicant (Bitfinance).
The application is founded on section 3 as read with section 4 of the Administrative Justice Act (Chapter 10:28) as amplified by section 68 of the Constitution of the Republic,” Chui said in his founding affidavit.
“I humbly submit that the decision by the first respondent aforesaid is in violation of both good administrative justice law and the Constitution of the country.
Applicant implores this honourable court, on an urgent basis, to set aside and reverse the decision by the respondents.
“The decision was unlawful in that the respondents (RBZ and Mangudya) lacked jurisdiction to make the decision.
They acted ultra vires their enabling Act.
It is clear from the wording of the preamble of the RBZ Act, that first respondent has power to regulate the banking industry and currency in Zimbabwe. . . applicant is not a banking or financial institution.
It does not fall within the banking or financial services sector.”
Chui further said even though his company partners with banks in serving its clients, it is neither a bank nor a financial institution as defined in the RBZ Act, but “it is a start-up in the emerging financial technology industry”.
He said the decision by the central bank and Mangudya to invoke certain sections of the RBZ Act and effectively banned cryptocurrency business with effect from May 17, 2018, was ill-advised.
The Bitfinance deputy chief executive officer argued that cryptocurrency business in most parts of the world, let alone in Zimbabwe, has not yet been regulated.
“For the applicant, there has not yet been assigned a government department to which applicant can go for licensing.
Applicant has not been told by respondents or any government department of the need for it to be licenced in order to operate,” Chui said.
Chui said Bitfinance was running a business based on what is known as block-chain technology adding it has been running this cryptocurrency exchange since late 2015 and at the time of the ban it had 49 333 registered customers.
“The exchange was also being used to make international payments by Zimbabweans.
For instance, a person in Zimbabwe intending to purchase motor vehicle online from the Japanese used car exporter, Be Forward, would buy cryptocurrency on the exchange.
Clients were also using the exchange as an alternative store of value. In this case, clients would simply use their fiat currency to purchase cryptocurrency which they would then store in their wallets as savings.”
The matter is yet to be set down for hearing.