Zimbabwe Stock Exchange (ZSE) is planning to incorporate blockchain technology into its operations to improve trading services.
It follows a similar move by other exchanges around the world, including Switzerland’s SIX Exchange, Jamaica Stock Exchange, and NASDAQ.
Zimbabwe Stock Exchange Initiatives
According to ZSE’s chief executive, Justin Bgoni, Zimbabwe Stock Exchange will be using distributed ledger technology (DLT) to improve its trading services and product offering. More specifically, the Zimbabwe Stock Exchange blockchain initiative is planned for use in products such as mineral commodities exchange, exchange-traded funds (ETFs) and real estate investment trust securities (REITs). The aim is to leverage the benefits of blockchain to transform the financial institution into a world-class exchange.
Bgoni highlighted that blockchain brings transparency to the finance sector. As such, the disruptive technology can help mitigate fraud and improve investors’ confidence. However, he noted that due to regulatory uncertainty, ZSE will not be implementing blockchain just yet.
“Then there is the money side to blockchain technology. This is a bit difficult, in terms of regulation, we are not yet clear on this, and we do not want to do something where regulation is not clear as an exchange. But the technology side is very good.”
Navigating Regulatory Requirements
Despite the promising potential of Zimbabwe Stock Exchange blockchain initiative, ZSE still has a long way to go before the launch is possible. Currently, ZSE operates under a regulatory framework developed by the Zimbabwean government. These regulations have provided an enabling environment for ZSE to innovate—like the launch of C Trade mobile trading platform. However, legal and regulatory issues associated with blockchain-based stock trading still remain a stumbling block.
For instance, Zimbabwe’s central bank, Reserve Bank of Zimbabwe (RBZ) banned cryptocurrencies in 2017, labeling Bitcoin as an illegal asset. For Zimbabwe Stock Exchange blockchain initiative to launch successfully, there must be clarity on a regulatory framework regarding blockchain technology.
Meanwhile, Director of RBZ, Norman Mataruka, revealed that they are in the process of creating a regulatory framework specifically for digital assets and cryptocurrencies. It remains to be seen how fast the bank fast tracks this process even as blockchain startups prepare for ICOs and traditional businesses implement blockchain strategies.