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Cryptocurrencies not legal tender, Bank of Namibia insists

While the provision of virtual asset services is legal in Namibia, cryptocurrencies are not recognised as legal tender in the country.

This was confirmed by the Bank of Namibia (BoN) in a statement issued by its spokesperson, Kazembire Zemburuka, on Wednesday.

He was responding to questions on whether granting provisional authorisation to two companies – Mindex Visual Asset Exchange (Pvt) Ltd and Landifa Bitcoin Trade CC – to provide virtual asset services meant the use of cryptocurrencies is now legal in Namibia.

He said the Virtual Assets Act of 2023 gives the bank the mandate to license and supervise virtual asset service providers (VASPs).

“Therefore, the provision of virtual asset services, such as the exchange of fiat currency for cryptocurrencies or vice versa, as defined in the act, is legal in Namibia,” Zemburuka said.

A fiat currency is the national currency (such as the Namibia dollar) that is not pegged to the price of a commodity such as gold or silver.

Zemburuka said the entities had been granted the provisional authorisation based on their applications to operate as wwVASPs under the act.

“Provisional authorisation is a preliminary stage before full licensing is granted and is valid for six months, during which the entities are prohibited from offering any products or services to the public until full licensing has been obtained,” he said.

“However, it is important to note that cryptocurrencies are not legal tender in Namibia and are not legally recognised or accepted as a means of payment,” Zemburuka added.

Cryptocurrencies are a type of digital currency that allow people to make payments directly to each other through an online system.

Said the Virtual Assets Act does, however, allow a range of virtual asset services to be provided to the public through licensed service providers.

These services, categorised under specific licence classes, include the issuance of tokens and initial token offerings, enabling Namibian entrepreneurs to raise capital through tokenised projects.

The act also allows the exchange of virtual assets for fiat currency or other cryptocurrencies, and vice versa and provides for the creation of legal platforms where Namibians can trade cryptocurrencies.

“Providers offer secure storage and transfer solutions for virtual assets, ensuring the safekeeping of users’ virtual assets ensuring the safekeeping and proper administration of virtual assets,” he said.

Zemburuka said licensed service providers, who fall under the supervision of BoN in collaboration with the Namibia Financial Institutions Supervisory Authority (Namfisa), offer professional guidance, helping Namibians make informed decisions when investing in token offerings.

He said the bank had undertaken several public awareness initiatives over the past two years to educate the public on the nature of virtual assets, the associated risks and the regulatory framework established under the Virtual Assets Act.

Zemburuka said the implementation of the act offers significant benefits to the country’s economy as it creates a secure and regulated environment for the provision of virtual asset services.

“This framework ensures Namibians can participate in virtual asset services through licensed and supervised entities, reducing the risks associated with unregulated markets, such as fraud and money laundering,” Zemburuka said.

Namfisa spokesperson Joanette Eises said the supervisory authority does not have regulatory power over cryptocurrencies.

“Under Section 5 of the Virtual Assets Act, the minister of finance and public enterprises designated the Bank of Namibia as the regulator for all virtual assets, including cryptocurrencies,” she said.

However, she said Namfisa supports the BoN by assisting in the evaluation of virtual asset applications that involve non-banking elements, such as virtual asset marketplaces.

The granting of provisional authorisation was welcomed by Windhoek economic researcher Halelluya Ndimulunde, who said the new entities would bring financial inclusion to Namibians who might otherwise not have access to conventional banking services.

Expressing similar sentiments was Getrud Malawi, a Windhoek forex trader who said it was in keeping with worldwide trends and a step towards recognising cryptocurrency as legal tender in Namibia.

– email: matthew@namibian.com.na

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