Cryptocurrency not legal payment method in Namibia yet

Kazembire Zemburuka

The Bank of Namibia (BoN) is maintaining its stance that cryptocurrencies and virtual assets are not yet authorised as legal tender for transactions involving goods and services within the country.

This is despite a parliament-approved law regulating these currencies.

The acceptance of cryptocurrencies and virtual assets, as per the approved regulations, is entirely at the discretion of individuals and based on mutual agreement between buyers and sellers.

“This approach should not be interpreted as an endorsement of virtual assets or its providers. Public members who own, utilise and/or trade in virtual currencies do so at their own risk, and any misfortune or losses incurred will have no recourse to the bank,” BoN spokesperson Kazembire Zemburuka says.

According to the Ministry of Finance and Public Enterprises, the aim of the virtual asset bill, which was passed in the National Assembly last month, is to establish regulations for virtual asset service providers and related activities in Namibia.

It seeks to ensure consumer protection, preventing market abuse and preventing or mitigating the risk of money laundering and terrorist financing posed by virtual assets markets, and to make provision for incidental matters.

However, the central bank has expressed its recognition of the potential benefits virtual assets, including cryptocurrencies, hold for the country’s financial landscape.

“The bank recognises the potential of virtual assets to foster financial inclusion, make payment systems more resilient and affordable and enhance cross-border payments,” Zemburuka says.

The BoN also acknowledges that while innovations like virtual assets are promising, they are not without risks.

“When the associated risks that come with innovations such as virtual assets in the financial system are better managed, the bank will make the necessary assessments and pronounce itself on their acceptance,” Zemburuka says.

Minister of finance and public enterprises Iipumbu Shiimi last month said the new law holds significant importance in safeguarding consumer interests, combating market abuse and mitigating the risks of money laundering and terrorist financing associated with virtual asset markets.

“In essence, the aim of the bill is for us to create a regulatory framework to protect consumers, and the risk of money laundering is mitigated,” he said.

The legislation, which has earned Namibia international praise, was also welcomed by Jesaya Hano-Oshike, an investment consultant at RisCura Consulting, who said it would mitigate risks around fraud and money laundering.

He said it should, however, not prevent Namibian innovators from developing digital assets and operating businesses in Namibia by imposing excessive burdens or hindrances.

“The legislation should not stifle innovation in the space, but rather encourage and foster innovation when it is done in the scope of the legislation,” Hano-Oshike said.

The bill is yet to be signed into law by president Hage Geingob, and Shiimi is expected to assign a regulatory authority to virtual assets in the country.

This governing body will assume the responsibility of licensing virtual asset service providers, and overseeing, supervising and monitoring activities related to the provision of virtual asset services.

As per the bill, individuals or entities engaging in virtual asset services without proper registration with the regulatory authority may face penalties of up to N$10 million in fines, imprisonment for a maximum period of 10 years, or both.

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