As Zimbabweans Struggle For Cash, Even The Country’s Only Bitcoin ATM Has Run Dry

The Golix bitcoin ATM took on obvious importance when it was first introduced in the Zimbabwean capital Harare, early April. In a country without a currency of its own, where conventional automated teller machines (ATMs) have become useless due to a severe cash crisis, the bitcoin machine was seen as the new gateway to faster cash transfers and cash availability. Now, it is a ‘white elephant’ – unused and redundant. But Golix trudges on.

Also read: South African Tax Authority Going After Crypto Traders

A Digital Cash Machine Without Cash

Today, the machine no longer dispenses cash, or facilitates any trades at all, even though it can still be seen in the Golix offices in central Harare. There is no point, after all, to have on display a little piece of furniture if there is uncertainty about the future of cryptocurrencies in the country.

Golix spokesperson, Nhlalwenhle Ngwenya, refused to comment about any operational issues, claiming such matters were still under litigation. The exchange is challenging the RBZ ban in the Zimbabwe High Court, a case still pending. But at the time the ATM was activated in April, Golix said:

Crowning Moment Shattered

Virtual money had long operated under a cloud of uncertainty, but the RBZ move at the time suggested they were entering a dark, unpredictable phase. They have. Often, investors look at digital currencies as an investment. But the RBZ’s chokehold on limited foreign currency means that some Zimbabweans had started to use cryptocurrencies to pay for goods and services abroad – like school fees, health bills or car imports. Golix was their intermediary. And the central bank didn’t like that. It accused Golix of mimicking banking activities by accepting deposits, something they weren’t allowed to do because, one – the exchange was not a bank, and two – it wasn’t licensed to do so. The RBZ pointed to Golix’s, or any other crypto exchange, ability to transfer cash across borders like a remittance company, without its approval and, obviously, control, as perhaps the highest form of mischief and anarchy.

Cut All Ties

On May 11, RBZ governor John Mangudya ordered banking institutions that were offering services to Golix and the other Zimbabwean exchange, Styx24, to cut all ties with the crypto exchanges within 60 days. The banks were a lot swifter in their responses and severed ties within days of the instruction. Panic ensued and there was a run on Golix deposits. A ban had taken effect, albeit through the backdoor.

This is the ban that has taken cryptocurrency investors in Zimbabwe away from centralized, stable exchanges to social media forums like Whatsapp and Facebook, where the risk of theft, loss and fraud is significantly higher – apparently anathema to the central bank’s intentions. A ban that has frustrated Golix’s maiden token sale of $32 million in July, an offer floated in defiance of the ban, was itself seen by pundits as having clearly spooked the RBZ into the prohibition in the first place.

Looking For a Way Out

Ngwenya, the exchange’s spokesperson, refused to discuss the matter, citing the pending court challenge. But some investors are starting to express concern: “I have had no explanation besides an email saying they (Golix) will provide updates… and they have been quiet since,” complained an investor, who had just $70 worth of bitcoin left on the platform at the time of the ban.

On paper, cryptocurrency withdrawals would have been the easiest thing to do because Golix keeps some of the coins in their hot wallet – a kind of live online purse that allows for instant cryptocurrency transfers. And those in the cold storage – the offline wallet, where the majority of crypto is stored, shouldn’t be difficult to transfer to investors. The RBZ ban affected fiat withdrawals, not crypto.

Do you think financial regulators in Africa will allow cryptocurrencies to flourish unhindered? Let us know what you think in the comments section below.