By Cecilia Chiluba/Zambia/Lusaka
Bank of Zambia (BoZ) says it is in the process of finalizing the issuance of regulatory directives on virtual assets, signaling a significant step toward formal oversight of cryptocurrency activities in the country.
The move positions Zambia among a growing number of African countries developing formal regulatory frameworks for cryptocurrencies amid increasing public interest and global adoption of digital financial technologies.
Speaking during an Economic Forum in Lusaka, BoZ Deputy Governor-Operations, Dr. Francis Chipimo said the initial response to the rise of cryptocurrencies was guided by caution, as the Central Bank sought to better understand the risks and implications of the emerging sector before imposing regulations.
“At the beginning, there was a question for Central Banks on how best to deal with this space. We did not fully understand it, so our approach was to first assess the impact before imposing a regulatory framework on the market without fully understanding what those implications are going to be,” he said.
Dr. Chipimo explained that the Bank earlier issued a cautionary statement warning members of the public about the risks associated with investing in cryptocurrencies.
He stressed that the statement urged potential investors to fully understand the volatility and possible losses in the market.
“Most of us tend to think about the positive consequences — making a lot of money — we do not think about what happens when something blows up. So that was the purpose of the cautionary statement to ensure citizens appreciate both the risks and the rewards,” Dr. Chipimo explained.
Dr. Chipimo stated that since then, the Central Bank has been working closely with key stakeholders, including players in the banking sector, to develop draft regulations governing virtual assets.
He said internal consultations on the draft directives have now been concluded, adding that the proposed framework was also submitted to the Business Review Regulatory Agency to ensure consistency with existing laws.
“We have cleared the major internal discussions and sought alignment with the business regulator. We are now in the process of finalizing that now before issuing the directives,” he added.
Dr. Chipimo acknowledged the delicate balance between fostering innovation and safeguarding financial stability.
While recognizing that financial technology innovations can drive economic growth, he stressed the need to guard against systemic risks that may arise from unclear market structures and interconnectedness within the financial system.
