By Jabulani Chibaya and Tinotenda Bhunu
HARARE – KENYA’S experience offers Zimbabwe an important lesson: passing laws to regulate virtual assets is one thing; building institutions capable of enforcing them is quite another.
The debate about cryptocurrency in Zimbabwe is often framed around a familiar question: should the country embrace digital assets or restrict them? It is a question that presents a false choice. The more important question is whether Zimbabwe can establish rules that protect the public and the integrity of the financial system without suppressing the innovation that makes digital assets economically useful.
This distinction matters. Financial innovation does not become dangerous merely because it is unfamiliar to regulators. Nor does an activity become safe simply because it operates through technology. The task of public policy is to understand the risks, establish clear rules and hold market participants accountable.
Zimbabwe has begun moving in this direction. The Finance Act No. 7 of 2025 introduced important provisions relating to virtual asset service providers (VASPs), while Statutory Instrument 99 of 2026 established further registration and compliance requirements. These developments indicate a shift from treating virtual assets as a peripheral concern to recognising them as part of the country’s evolving financial landscape.
But legislation is only the beginning. The experience of Kenya, examined in the International Monetary Fund’s October 2026 Technical Assistance Report, Regulation and Supervision of Crypto Markets and Activities, offers a useful warning: even a regulatory framework broadly aligned with international standards can fall short if the institutions responsible for implementing it lack the capacity, information and coordination to supervise the market effectively.
The market will not wait for regulators
The growth of digital assets is not simply a product of technological enthusiasm. It is also a response to economic conditions.
In economies where access to conventional financial services is expensive, cross-border payments are cumbersome and confidence in domestic monetary arrangements is fragile, individuals and businesses have incentives to explore alternative ways of storing and transferring value.
Zimbabwe is no exception. Dollar-linked stablecoins, particularly USDT, have become relevant to discussions about digital payments, international transactions and the informal economy. Their attraction is understandable. A digital instrument linked to the United States dollar may offer users a convenient means of transferring value across borders and accessing dollar-denominated transactions.
Yet convenience should not be confused with the absence of risk.
A stablecoin is not the same thing as a bank deposit. Its usefulness depends on the credibility of its issuer, the quality and liquidity of its reserves, the reliability of redemption arrangements and the infrastructure through which it circulates. Users may believe that a token is worth one US dollar, but that belief is only as strong as the arrangements supporting the promise.
The IMF report’s discussion of Kenya illustrates the scale of the policy challenge. It estimates that Kenya’s crypto market reached approximately US$6 billion in 2025, with stablecoin transactions potentially accounting for US$3 billion to US$4 billion. The report describes a market driven largely by retail activity, including speculation and demand for dollar-denominated stablecoins, with growing use in informal cross-border trade and potentially remittances.
These are estimates, not a complete measurement of every transaction. Nevertheless, they demonstrate why regulators cannot afford to rely on assumptions about the size or purpose of digital-asset markets.
Zimbabwe needs its own evidence.
How many people use stablecoins? How much activity takes place through registered exchanges, peer-to-peer platforms and unhosted wallets? Are businesses using them to settle international invoices? What is their relationship with the banking system? And to what extent are they contributing to currency substitution?
Without answers, regulation risks becoming an exercise in controlling what authorities can see while ignoring what actually happens in the market.
Kenya’s lesson: a law is not a supervisory institution
Kenya’s regulatory experience is instructive because it demonstrates the difference between establishing a legal framework and making that framework work.
The country enacted its Virtual Asset Service Providers Act in October 2025. Its regulatory architecture assigns responsibilities to the Central Bank of Kenya, the Capital Markets Authority and the Financial Reporting Centre. The arrangement recognises that different virtual-asset activities create different risks.
The central bank’s responsibilities include relevant payment and stablecoin-related activities, while the capital markets regulator oversees activities such as exchanges, brokerage and investment services. The Financial Reporting Centre has a financial-integrity role.
This division is important. A business holding customers’ digital assets, an exchange matching buyers and sellers, and an issuer promising redemption of a stablecoin do not perform identical economic functions. They should not automatically be treated as though they present identical risks.
The IMF, however, identifies implementation as the real challenge. It calls for stronger coordination, reliable regulatory reporting, risk-based supervision and effective enforcement. It also emphasises that regulators need to understand the firms they supervise, rather than relying exclusively on the information those firms choose to provide.
Zimbabwe should take this lesson seriously.
The Financial Intelligence Unit, the Securities and Exchange Commission of Zimbabwe and the Reserve Bank of Zimbabwe need clearly defined and coordinated responsibilities. Where a virtual-asset business performs several functions, there should be no uncertainty about which institution is responsible for which aspect of its activities.
Regulatory overlap can create opportunities for gaps in supervision. One authority may assume that another is monitoring a particular risk. The business continues operating, while responsibility becomes a matter of institutional interpretation.
The solution is not necessarily to create more regulators. It is to make existing institutions work together through clear mandates, information-sharing arrangements and joint supervisory procedures.
Financial integrity requires more than registration
One of the most important dimensions of virtual-asset regulation is the prevention of money laundering, terrorist financing and proliferation financing.
Digital assets can move across borders rapidly, pass through multiple wallets and interact with service providers operating in different jurisdictions. These characteristics can complicate the work of financial intelligence units and law enforcement agencies.
But it would be a mistake to assume that every cryptocurrency transaction is suspicious. The relevant question is whether the transaction, considered alongside the customer’s profile, source of funds, counterparties and economic purpose, presents a risk that requires further investigation.
This is where the Financial Action Task Force’s Travel Rule becomes important. It requires relevant information about the originator and beneficiary of a virtual-asset transfer to accompany the transaction between service providers.
The Kenyan IMF report identifies the absence of an enforceable Travel Rule obligation as a weakness in the framework it reviewed. Merely requiring a service provider to retain transaction records is not equivalent to requiring it to transmit relevant customer information to the receiving provider at the time of the transfer.
Zimbabwe has made progress by incorporating Travel Rule requirements into its emerging VASP framework. The challenge now is implementation. Regulators must establish whether service providers possess the systems, procedures and expertise to comply.
A suspicious transaction report should not be the end of the analytical process. Investigators need to understand where funds originated, how they moved, which wallets received them and whether the transaction connects to an identifiable criminal activity.
This requires investment in blockchain analytics, financial intelligence and the training of investigators. It also requires cooperation with foreign counterparts because digital-asset transactions do not respect national borders.
The objective should be to make it increasingly difficult for criminals to exploit digital financial infrastructure, without treating legitimate users as suspects merely because they use new technology.
Stablecoins and the question of monetary sovereignty
For Zimbabwe, the regulation of stablecoins raises a question that extends beyond financial crime: what happens when people increasingly rely on privately issued digital instruments linked to foreign currencies?
The answer cannot be found in slogans about monetary sovereignty. Monetary sovereignty is not secured by prohibiting competing payment instruments while ignoring the economic conditions that create demand for them.
People choose financial instruments for reasons. They consider purchasing power, transaction costs, accessibility, convenience and confidence. If a digital dollar is perceived to offer a more reliable means of transferring value than available alternatives, users will have an incentive to adopt it.
That behaviour has implications for monetary policy.
Widespread stablecoin use could influence the demand for domestic currency, the transmission of monetary policy and the relationship between banks and non-bank payment providers. It could also introduce new channels through which financial stress spreads.
The IMF report warns that stablecoin issuers holding significant reserves in bank deposits and financial instruments may create links between crypto markets and traditional financial markets. A sudden wave of redemptions could force issuers to withdraw deposits or sell assets, transmitting pressure into the wider financial system.
For this reason, Zimbabwe should pay attention to reserve quality, asset segregation, liquidity, redemption rights and disclosure requirements.
A stablecoin issuer should be able to demonstrate what backs the tokens it issues, where those assets are held and how customers can redeem their holdings. Users should not be left discovering the weaknesses of an issuer’s arrangements only when they attempt to withdraw their money.
This is not hostility towards financial innovation. It is the application of a basic principle: those who issue financial claims should be accountable for the promises they make.
Regulation must be proportionate
There is another danger that Zimbabwe must avoid: imposing regulatory requirements so burdensome that legitimate businesses are discouraged from entering the market.
A small technology company providing a limited wallet service does not necessarily create the same risks as a large exchange holding substantial customer assets. Nor should a stablecoin issuer with significant connections to the banking system be treated like a business offering basic software services.
The IMF report recommends a proportionate approach to licensing and supervision, taking account of the size, complexity and risk profile of different crypto businesses. It also highlights the need for reliable reporting and supervisory tools.
This is consistent with a sound economic principle: regulation should respond to the risks created by an activity, rather than the label attached to it.
Where requirements are excessive, businesses may be pushed towards informal or offshore arrangements. That does not eliminate the underlying activity. It may simply make it harder for authorities to monitor.
On the other hand, weak regulation can expose customers to fraud, mismanagement and the loss of funds. Neither outcome serves the public interest.
The objective should be a regulatory environment in which compliance is achievable, misconduct has consequences and legitimate innovation has room to develop.
From legislation to institutional capacity
Zimbabwe’s next phase of VASP regulation should focus on implementation.
First, regulators should develop a reliable picture of the domestic market through surveys, regulatory returns and cooperation with relevant private-sector participants. Policy should be informed by evidence about actual usage, not speculation.
Second, the FIU and financial regulators should develop the technical capacity to analyse blockchain transactions, investigate suspicious activity and exchange information effectively.
Third, stablecoin-related businesses should face clear requirements covering reserves, custody, liquidity and redemption. Consumer protection must extend beyond warnings about price volatility.
Fourth, supervisory responsibilities should be coordinated. The FIU, SECZIM and RBZ must be able to identify overlapping risks and respond without leaving institutional gaps.
Finally, regulation should be reviewed as the market develops. Digital-asset technology changes quickly. A framework that cannot learn from experience will eventually become either ineffective or unnecessarily restrictive.
The real test is whether Zimbabwe can get the balance right
There is little value in celebrating the enactment of regulations if the authorities cannot identify the businesses operating in the market, understand the transactions they facilitate or respond when customers lose money.
Kenya’s experience is a reminder that regulatory credibility is built through implementation. Laws establish the rules, but institutions give those rules practical meaning.
Zimbabwe should neither romanticise digital assets nor fear them. They are financial instruments and technologies whose usefulness and risks depend on the activities built around them. Their regulation should therefore be grounded in economic realities, institutional competence and respect for legitimate enterprise.
The state has a responsibility to prevent fraud, protect consumers and preserve the integrity of the financial system. It also has a responsibility not to turn regulation into an obstacle to voluntary exchange and productive innovation.
The question is not whether Zimbabwe should choose financial integrity over innovation, or innovation over financial integrity. It is whether the country can build institutions capable of securing both.
Zimbabwe does not need regulation that merely controls the digital-asset market. It needs regulation that understands the market, disciplines misconduct and allows legitimate economic activity to flourish.
Jabulani Simplisio Chibaya is a Data and AI Consultant specializing in data science, artificial intelligence, blockchain, and cryptocurrency innovation. A seasoned conference speaker, he also writes on the intersection of technology, regulation, and economic development. Contact: Cell: +263 778 921 881 | Email: simplisiochibaya22@gmail.com | LinkedIn: https://www.linkedin.com/in/jabulani-simplisio-chibaya
Tinotenda Bhunu is an economist by profession. LinkedIn: https://www.linkedin.com/in/tinotenda-bhunu-114645208?utm_source=share&utm_campaign=share_via&utm_content=profile&utm_medium=android_app
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