The Republic of Burundi, a central African country squeezed between the Democratic Republic of Congo, Rwanda and Tanzania, has banned all cryptocurrency activity within the state.

A statement from the Bank of the Republic of Burundi said the action was necessary to protect consumers from potential losses. The measures were taken after a number of citizens asked for government intervention having lost money trading cryptocurrencies, according to a report by Bloomberg.

The statement said that cryptocurrency prices were “highly volatile” and resulted in speculative transactions that expose users to potential losses and no legal recourse should their value suddenly collapse or if an exchange goes bust. The statement continued:

Since virtual currencies or cryptocurrencies are not regulated and are not issued or guaranteed by any Government or Central Bank, these currencies do not have legal tender in the territory of Burundi.

Stopping Remittances

The central bank added that remittances and other payment services were included in the ban. Bitcoin and other cryptocurrencies are increasingly being used in cross-border transfers – especially in areas of the world where many citizens have little access to financial services. Indeed, remittances formed 1.2% of Burundi’s gross domestic product last year, according to World Bank data.

Taking to Twitter, Kenyan cryptocurrency commentator Kenya Coin suggested Burundi was not banning crypto to protect consumers, it was because “its currency is being devalued and they think making bitcoin trading illegal is an easy and effective capital control measure”. 

It added:

Just because some regulator says 'bitcoin trading is illegal', that will not stop freelancers in Burundi from taking gigs that pay in bitcoin, or stop bitcoin being used for remittance, or P2P exchange …