New P2P Bitcoin (BTC) exchange CryptoGem Global has opened in Harare despite the Reserve Bank of Zimbabwe’s crackdown on digital currencies. Zimbabweans can purchase and sell BTC without the need for intermediaries like legacy financial institutions using the decentralized platform.
“CryptoGem Global is a… Bitcoin trading platform where people around the globe can exchange their local currencies and e-money to bitcoin,” CryptoGem Global co-founder and chief executive officer Melissa Mwale said.
According to Mwale, the plan is to build a borderless platform that will not limit trades to a certain nation. She explained that the firm seeks to offer a service which would enable “someone in Zimbabwe to buy from someone in the U.K. using Paypal, Skrill or Western Union.”
Cryptocurrencies have operated under a cloud of uncertainty in Zimbabwe for some time. However, the Reserve Bank of Zimbabwe’s crypto ban signaled the beginning of an unpredictable and dark phase, as it crippled the operations of the only two local crypto trading platforms, Styx24 and Golix. Since then, Bitcoin trades have shifted to social media platforms such as WhatsApp or have gone underground, where there is a relatively higher risk of fraud or theft.
Zimbabwe’s central bank lacks the power to shut down crypto exchanges that allegedly offer unlicensed banking services, violating the Exchange Control Act. However, the law does not enable it to ban digital currencies. The High Court quashed the Reserve Bank of Zimbabwe’s attempt to directly close down Golix. The court ruled that central bank governor John Mangudya did not have jurisdiction over the nation’s crypto industry.
The central bank closed the exchanges by proxy, via commercial banks, over which it yields absolute control. It asked the banks to close the accounts of Styx24 and Golix. With that, all centralized cryptocurrency trading activities ceased in the nation.
CryptoGem is defying the backdoor ban cleverly. The P2P BTC exchange does not own a bank account so the Reserve Bank of Zimbabwe is unable to shut them down.
“CryptoGem does not have any bank accounts in Zimbabwe,” Mwale stated. During its first week, the platform has witnessed 300 new registrations, with the overall trades reaching approximately $2,000. Transaction fees average 0.9% for offers and 0.00005 BTC for withdrawals and deposits.
“There is actually no need for a bank account at the present moment, though we are registered fully as a private limited company in Zimbabwe. We don’t work with banks directly as we do not handle any fiat currency. And if you noticed, the (central bank) ban was mainly directed to using banking services by exchanges,” she added.
However, Zimbabwean finance minister Mthuli Ncube will encourage the new exchange. He has spoken positively about the blockchain and digital currency.
“I think the attitude for Zimbabwe should be to invest in understanding (digital assets) innovations,” Ncube stated. “Often central banks are too slow in investing in these technologies.”
CryptoGem traders have to make a BTC deposit, offer, and wait for bids matching the required price or the one favorable to them. When a purchaser displays interest, they will be redirected to a private live chat with the seller to finalize transaction details, including payments. Once the seller confirms payment, the exchange will release the BTC to the buyer.
Bitcoin’s price on the exchange is inflated at between $20,000 and $24,000, reflecting the volatility of exchange rate. The present Bitcoin Core prices in Zimbabwe seem to track the USD black market rate, priced at three different levels based on the payment method: by mobile or bank transfer, coins, and/or paper notes. Every dollar costs around thrice as much for the cash transfer by mobile phone or bank of the Zimbabwean substitute currency, called “bond notes,” which, according to authorities, is 1:1 with the USD.
Mwale claimed that all accounts are protected with two-factor authentication.
“Only a very minimum amount of funds are kept online (hot wallet) just to facilitate quick withdrawals,” she said. “On application security, we have third-party security auditors that come in and audit security in our core application. Our server information is hidden from the public, it’s behind a firewall provided by one of the industry leaders in this regard.”