Zimbabwe’s Crypto Gold Rush: Millions of Tokens Sold Despite IMF Warnings

The Reserve Bank of Zimbabwe has succeeded greatly with its first gold-backed cryptocurrency.

Approximately $39 million worth of digital tokens backed by gold, were sold by the Reserve Bank of Zimbabwe, totalling 14 billion Zimbabwean dollars.

The gold-backed digital tokens were sold disregarding the warnings from The International Monetary Fund.

Prior to disclosing on May 8, that it would be setting a good price for its gold-backed digital tokens, on May 12th, the Zimbabwean central bank announced that it had received 135 requests for the purchase of the cryptocurrency backed by gold, totalling 14.07 billion Zimbabwean dollars.

According to XE.com, the cache is nominally worth roughly $38.9 million given the official exchange rate of 362 Zimbabwean dollars to one US dollar but substantially higher on the street.

With this new development, the Reserved bank has requested for applications to be submitted for the second round of digital token sales on May 18.

According to Dr John Mangudya, RBZ Governor:

“The issuance of gold-backed digital tokens is meant to expand the value-preserving instruments available in the economy and enhance the divisibility of the investment instruments and widen their access and usage by the public.”

What You Should Know about the Zimbabwean Crypto Tokens

In April, the Zimbabwean token was launched that is supported by 139.57 kilograms of gold. From May 8 to May 12, there was a sale of these tokens.

The minimum price for buying the token was set at $10 for private buyers and $5,000 for businesses and other entities.

The tokens have a 180-day minimum vesting period and can be kept on e-gold cards or in e-gold wallets.

According to reports, the action is intended to stabilize the economy of the nation and stop the ongoing devaluation of the local currency in relation to the US dollar.

IMF Cautions the Reserve Bank of Zimbabwe

The reserve bank of Zimbabwe has been issued a warning by the IMF arguing that the bank should instead liberalize its foreign exchange market against the African nation’s plan for the gold-backed currency.

According to a report from Bloomberg;

“To make sure the benefits of this approach outweigh the costs and potential hazards, such as risks to macroeconomic and financial stability, risks to legal and operational stability, risks to governance, and costs associated with forgoing FX reserves, a detailed assessment should be made.”

Impact of this Success on Zimbabwe

For more than ten years, Zimbabwe has been grappling with instability in its currency and inflation. After a phase of hyperinflation that rendered the local currency worthless, the country switched to using the USD as its currency in 2009.

However, the Zimbabwe dollar was reintroduced in 2019 in an attempt to revitalize the local economy, but it has since experienced a renewed period of instability.

This new development might give the Zimbabwe economy and its currency a push, just enough for the country to bounce back on its feet.

Conclusion

There are too many developments in the crypto industry recently such as adoption and policies forcing other crypto exchanges to call it quit. This shows that Crypto is still developing, and it is yet to face the last of its challenges.