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A Regulatory and Policy Analysis of Cryptocurrency in Zambia

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1.0. Introduction
New technologies are driving transformational changes in the global economy, including on how goods, services, and assets are exchanged. The development of monies and a variety of payments systems throughout history have helped to make exchange more efficient and secure. The rapid spread of Internet-based commerce and mobile technology–supported by advances in encryption and network computing–has driven the development of several innovative technologies. An important development in this process of transformation has been the emergence of cryptocurrencies.


Cryptocurrencies, in principle, question the paradigm of state-supported fiat currencies and the dominant role that central banks and conventional financial institutions have played in the operation of the financial system.


2.0. Regulatory and policy challenges
The anonymity and cross-border reach of cryptocurrencies raise genuine concerns from a financial integrity standpoint. Cryptocurrencies can be used to conceal or disguise the illicit origin or sanctioned destination of funds, thus facilitating the money laundering, terrorist financing, and the evasion of sanctions. Their traceability is limited due to user anonymity and anonymizing service providers that obfuscate the transaction chain. These vulnerabilities are not only theoretical, but have been exploited in practice.


Cryptocurrencies are often the “currency” of choice in cyber-related criminal activity.
The regulatory uncertainty and lack of transparency in cryptocurrencies create significant consumer protection vulnerabilities arising from risks relating to: Cryptocurrency systems; Cryptocurrency intermediaries and

service providers; Scams; and the irreversibility of transactions.
Cryptocurrency have a high potential as a means for tax evasion. This is because participants need not disclose their identity and transactions are peer-to-peer and can take place across borders.


Instead of purchasing foreign currency subject to government-imposed limitations, market participants can purchase cryptocurrencies on the Internet and use them to conduct Internet-based foreign exchange transactions or make capital transfers that would otherwise be prohibited.


3.0. Conclusion
It is important to note that the cryptocurrency landscape is still new and rapidly changing. It is therefore not possible to fully predict the future direction and importance of these evolving technologies or to identify specific longer-term policy responses. Any policy response to cryptocurrency will need to strike an appropriate balance between forcefully addressing risks and abuses while avoiding overregulation that could stifle innovation.


Article by Leonard Nkole Kalinde (Dr) (Notary Public) Partner- Equitas Legal Practitioners
Client Legal Alert – Equitas Legal Practitioners@2020
*This scholarly article is a general guide and does not contain definitive legal advice. Readers considering taking action on any of the issues discussed should speak to their legal advisors before taking any such action. Equitas disclaims any liability whatsoever arising from acting on this article.

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Professional Bio

Mr. Lungisani Zulu

partner

Mr. Lungisani Zulu (Partner – Banking, Tax and Finance) is a highly experienced legal practitioner with expertise in banking, financial services regulation, tax, and corporatebfinance. He holds a Master of Laws (LLM) in International Commercial Law from Cornell University School of Law, New York and a Bachelor of Laws (LLB) from the University of Zambia (UNZA)

He is an Advocate of the High Court of Judicature for Zambia with rights of audience before the Court of Appeal, Constitutional Court, and Supreme Court of Zambia, and is also a Commissioner for Oaths and Notary Public.

Mr. Zulu has over 15 years of standing on the Roll of Legal Practitioners in Zambia and possesses extensive experience in financial services regulation, legislative drafting, and corporate and commercial law. Having previously served as Associate for Tembo Ngulube and Associates and as Senior Counsel for the Bank of Zambia, his core competencies include banking and finance transactions, regulatory compliance, policy formulation, legal drafting, contract negotiation, and dispute resolution.

He has significant expertise in advising on financial laws, regulatory frameworks, and capital markets, as well as in providing legal support in litigation and arbitration matters. His practice also encompasses corporate governance, board advisory, and complex commercial transactions.

Mr. Zulu server as President of the Law Association of Zambia (LAZ) and also serves as President of savannah Law Network and a member of the Chartered Institute of Arbitrators (UK) and the Institute of Directors of Zambia and sits on the boards of both public and private companies.

Professional Bio

Ms. Chiluba Mumba

managing partner

The Firm’s Managing Partner, Ms. Chiluba Mumba, is a highly accomplished legal practitioner with primary expertise in Energy, Mining, Infrastructure, and Corporate Advisory. She holds a Master of Laws (LLM) in Corporate and Commercial Law from the University of London and a Bachelor of Laws (LLB) from the University of Zambia (UNZA). She is an Advocate of the High Court of Judicature for Zambia with rights of audience before all Superior Courts.

Ms. Mumba has over 15 years of standing on the Roll of Legal Practitioners in Zambia and has extensive experience in corporate and commercial law. Her core competencies include corporate advisory, regulatory compliance, project structuring, contract negotiation, and risk management, particularly within the energy, mining, and infrastructure sectors.

Previously she served as Associate for various firms and as Director Legal for the Energy Regulation Board. Her work experience spans across the energy sector in particular, electricity, petroleum, and renewable energy, with a strong focus on regulatory frameworks, licensing processes, project development, and investment structuring. She also has experience in commercial and civil dispute resolution, as well as governance and board advisory matters within highly regulated industries.

Ms. Mumba is equally a member of the Law Association of Zambia (LAZ) and the Institute of Directors of Zambia. She also serves as the Southern Africa Regional Coordinator for the Africa Minigrid Developers Association (AMDA) and is an Associate Member of the Chartered Institute of Arbitrators.