he Securities and Exchange Commission – SEC has clarified that it can only regulate cryptocurrency and other related digital assets that meet the definition of a security as defined by the Act.
SEC Chief Executive Officer – CEO Philip Chitalu in a statement availed to the Zambian Business Times – ZBT stated that “whether any digital assets or products fit the description of a financial security in accordance with the Securities Act No. 41 of 2016, it will be assessed on a case by case basis focusing primarily on each product’s characteristics, features and uses”.
Chitalu stated that crypto currencies are numerous with their ever broadening form spanning from the famous Bitcoin, alternative coins, Initial Coin Offerings – ICOs to other products that are emanating from block-chain technology. Their market has grown rapidly with more and more people opting to use or invest in them.
The SEC CEO confirmed that his commission has received queries on whether these crypto currencies are safe to invest in and if they fall under the Commission’s ambit. Chitalu stated that currently these products are not regulated by the Commission unless they meet the definition of a security as defined by the Act and this, as indicated will be considered on a case by case basis.
Chitalu stated that the Commission would also like to advise investors, both current and potential, to observe extreme caution when dealing with self-proclaimed cryptocurrency educators, trainers and advisors as the credibility and accurateness of their teachings and advice are unverified.
He further cautioned those that are operating any systems and platforms within Zambia that effect or facilitate transactions for the various crypto currencies to ensure that they are not in any way abrogating any part of the Act and that those that meet the description of securities in accordance with the Act are registered with SEC.
Last month, the Bank of Zambia – BOZ issued a press statement on the regulatory winding down of local crypto currency company, Heritagecoin Resources Limited (HRL) which had accumulated deposits of the K15.3 million (about US$1.3 million). The Anti Corruption Commission – ACC ceased the deposits from the company in various bank accounts.
BOZ in 2018 declared that cryptocurrencies such as Bitcoin are not legal tender, warning that those conducting transactions in the cryptocurrency would have nobody to turn to or blame in the event of market failure. However, some international critics of the institution and promoters of crypto currency Bitcoin accused the central bank of issuing the decree solely because it wants to promote its consistently depreciating fiat currency, the kwacha.
