Today, many financial institutions around the world have begun to consider using blockchain as a tool to help streamline services and improve efficiency. Following this trend, the chief executive of Zimbabwe Stock Exchange (ZSE), Justin Bgoni has indicated that ZSE is also looking to leverage the power of the blockchain to improve its services.
Potential Zimbabwe Stock Exchange Blockchain Applications
Bgoni has stated that the Zimbabwe Stock Exchange blockchain agenda will focus on adding blockchain based services and products to its offering; these products may include mineral commodities exchange and exchange-traded funds (ETFs) as well as real estate investment trust securities (REITs). Together, these Zimbabwe Stock Exchange blockchain products will help transform this finance institution into a world-class exchange. Bgoni has acknowledged the benefit of transparency that blockchain brings to the finance sector. Presently, he sees blockchain as a medium for mitigating fraud and improving the investor’s confidence.
Although ZSE has expressed willingness to explore distributed ledger technologies (DLT), the exchange hasn’t made any concrete moves yet due to regulatory uncertainty.
Speaking on the matter, Justin Bgoni had this to say:
“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.”
The Problem of Regulation
For many years, the Zimbabwe Stock Exchange has been successfully operating under a regulatory framework developed by the Zimbabwean government. During this period, ZSE embraced new technologies. The end result was the creation new products that help automate trades or target different niches. For instance, ZSE has actively been promoting a product last year called C Trade. The C Trade product facilitates the trading of shares via mobile devices. This is a major technology effort for opening up the exchange markets to the masses.
However, the adoption of blockchain technology is a different case altogether. Back in 2017, Zimbabwe’s central bank, Reserve Bank of Zimbabwe (RBZ) placed a ban on cryptocurrencies, labeling Bitcoin as an illegal asset even though experts argued that the financial climate within the country was ideal for the adoption of digital assets.
The transformative power of blockchain is so great that its adoption may disrupt current market structures; this could bring about substantial uncertainties and distrust. Therefore, there has to be an established regulatory framework that will promote trust in the technology. This will enable blockchain technology in Zimbabwe to reach its full potential.
Norman Mataruka, the Director of RBZ, has also stated that the bank is currently investigating the utility and risks involved with cryptocurrencies. They are actively exploring the creation of regulatory framework specifically for digital assets and similar technologies. This process has been gaining criticism for being too slow and overly cautious.
Stock Exchanges Embrace Blockchain
Many exchanges around the world are starting to shift their attention to blockchain technology. They are not only investigating its advantages, but some have even developed crypto-related products. Such products are seeking goals of normalizing cryptocurrencies for traditional equity investors.
For instance, Switzerland’s major stock exchange, SIX has announced it will integrate blockchain technology into its new Six Digital Exchange trading platform (SIDX). The reason behind this move is to improve trading speed and efficiency tremendously. SIX plans to debut its blockchain powered trading platform in the second half of 2019.
Other exchanges like the Jamaica Stock Exchange are looking into crypto-related initiatives. They announced in April that they would launch a limited pilot to trade Bitcoin and Ethereum while NASDAQ, the second largest stock exchange in the world, also announced that it was listing Bitcoin and Ethereum indices.