Citizens of the East African nation, Malawi, have recently been told by the Reserve Bank of Malawi that cryptocurrencies and digital assets are “not legal tender”, and should be approached with caution.
According to regional news agency Nyasa Times, Dr. Dalitso Kabambe, Governor for the Reserve Bank of Malawi since 2017, made a statement on Monday the 27th of May, stating that cryptocurrencies cannot be used as legal tender in Malawi, and should not be used in the place of government issued fiat currency, the Malawi Kwacha.
Kabambe also added that: “The general public is encouraged to fully understand and be aware of the risk associated with the usage of crypto currencies and similar online schemes which include money laundering, vulnerability to cybercrimes, hacking and other fraudulent activities.”
Malawi has previously experienced some issues with depreciation of Kwacha in the country, which has in part fueled economic instability in the past. However, although Kabambe has stated that cryptocurrencies and not legal tender, Malawian authorities haven’t imposed an outright ban on their citizens owning digital assets.
The Reserve Bank of Malawi have instead stated that as cryptocurrencies are unregulated in Malawi, there would be no legal recourse for those affected by scams or other loss of funds. Expanding on this, Kabambe advised Malawian citizens that crypto-related activities were instead carried out at the public’s own risk, and the Reserve Bank did not advocate trading or transacting in cryptocurrencies.
On the contrary, both Kabambe and the President of the ICT Association of Malawi, Bram Fudzulani, who has previously been an outspoken advocate of digital innovation and governance, said that whilst it is sensible to approach cryptocurrencies with diligence, blockchain technology itself may hold potential for Malawi.
Discussing crypto adoption and regulation, Fudzulani says: “We have seen, recently, a number of countries trying to keep up with the technology by putting in place a regulatory framework. In Malawi, this remains a challenge because we are still trying to understand the technology.”
Instead, Fudzulani has assured Malawian citizens that digital currencies, blockchain and crypto does hold potential for existing financial systems, commenting that the Reserve Bank of Malawi “is going to catch up and find ways and means to regulate the industry.”
A recent Monetary Policy Report from the Malawian Reserve Bank, published in May 2019, indicated that GDP in Malawi is up 1% from 2018, and the country is moving closer to ‘macroeconomic stability’. In the future, Malawi may be in a position to publish more robust guidelines on cryptocurrencies, to integrate with their existing financial infrastructure.