April 16, 2023 /Finance Technology/ — Zambia is currently testing a technology that would form the foundation of digital asset regulation. The tests are being conducted by the Bank of Zambia (BoZ) and the country’s securities regulator, the Securities and Exchange Commission (SEC).
The tests are designed to assess the feasibility of regulating digital assets in Zambia. They are also designed to identify any potential risks associated with digital assets and to develop mitigation strategies.
The tests are being conducted in three phases. The first phase is focused on developing a regulatory framework for digital assets. The second phase is focused on testing the regulatory framework with a small group of participants. The third phase is focused on scaling up the tests and making the regulatory framework available to the public.
Zambia’s central bank and securities regulator commenced the tests on February 19, 2023, which Mutati said was looking to balance safety and innovation: “Our main goal in the area of cryptocurrency is to strike a balance between innovation in terms of digital payments […] against citizens’ safety, particularly given that cryptocurrency is very volatile.”
The framework for Zambia’s digital asset regulation tests is as follows:
- The Bank of Zambia (BoZ) will be responsible for supervising and regulating digital asset exchanges and custodians.
- The Securities and Exchange Commission (SEC) will be responsible for regulating digital asset issuers and trading platforms.
- The Financial Intelligence Centre (FIC) will be responsible for monitoring and investigating suspicious activity related to digital assets.
The tests will focus on the following areas:
- The identification of risks associated with digital assets.
- The development of appropriate regulatory frameworks to mitigate those risks.
- The assessment of the impact of digital assets on the financial system.
- The development of a strategy for the orderly development of the digital asset market in Zambia.
The results of the tests will be used to inform the development of a comprehensive regulatory framework for digital assets in Zambia.