Reserve Bank of Malawi warns crypto is not a legal tender

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The Reserve Bank of Malawi (RBM) is the newest central bank to issue warnings against cryptocurrencies. The bank stated cryptocurrencies are illegal and are not a substitute for the local fiat currency, the Malawi Kwacha.

According to local news, the central bank has deemed cryptocurrencies illegal tenders in the country. Dr. Dalitso Kabambe, the governor of RBM, affirmed that there is an increase in the number of individuals and institutions inquiring about virtual currencies. Kabambe stated:

“Reserve Bank of Malawi wishes to advise the general public that cryptocurrencies are not legal tender in Malawi. The RBM is, however, aware that they are used as a means of payments or medium of exchanges, a store of value or invested assets online.”

He explained that although members of the public had shown great interest in digital currencies, Malawian authorities do not recognize their use.

In his warning, Kabambe added that the Malawian does not intend to recognize cryptocurrency investments. To back up his statement, he highlights some risks associated with crypto investments. First, the government does not have an institution that regulates or oversees crypto trading, and as such, all investments are purely at the owner’s risk.

Secondly, crypto exchanges operating in the region are not registered with the authorities. In his statement, this increased the risk associated with the use of cryptocurrencies. He added, “Users risk losing their money since no regulatory protection exist that would compensate them should the cryptocurrency scheme fail.”

Kabambe listed other possible risks, including money laundering, vulnerability to hacks, online security breaches, and other fraudulent activities. He emphasizes the use of financial service providers licensed by RBM as opposed to self-proclaimed cryptocurrency firms, trainers, and educators.

Malawi’s central bank might be against trading and investing in cryptocurrencies, but not blockchain technology. The bank explained that it is aware of the potential of blockchain, the underlying technology of most cryptocurrencies that has particular use cases in several industries. The bank concluded that it would continue monitoring and tracking its technological developments to review its stand on the subject.