Parliament approves law to regulate cryptocurrency

The National Assembly last week passed a bill which aims to legalise and establish regulations for virtual assets, such as cryptocurrency.

The bill now awaits being gazetted, after which the act will be implemented.

Minister of finance and public enterprises Iipumbu Shiimi says 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.

“The aim of the legislation was to create a regulatory framework to protect consumers, and the risk of money laundering is mitigated,” Shiimi says.

OWN RISK

However, individuals who own, use, or trade in virtual currency assume full responsibility for their actions, since virtual currency does not hold any legal tender status in Namibia, according to the Bank of Namibia (BoN).

The use and acceptance of virtual assets as legal tender or electronic money in Namibia is not acknowledged by the bank.

BoN spokesperson Kazembire Zemburuka acknowledges the potential of virtual assets to promote financial inclusion, improve the resilience and affordability of payment systems, and enhance cross-border payments.

“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,” he says.

WELCOME MOVE

Meanwhile, Jesaya Hano-Oshike, an investment consultant at RisCura Consulting, lauded the legislation, saying it would mitigate risks around fraud and money laundering.

However, he says it should not impede 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,” he says.

Arney Tjaronda, a financial analyst at High Economic Intelligence, commends the move, stating it represents a positive step towards establishing a well-regulated digital asset ecosystem.

Tjaronda emphasises the importance of striking a delicate balance between innovation, growth and risk management.
“Digital currencies, such as bitcoin, ethereum, and litecoin, have gained widespread attention, and their impact on monetary policy cannot be ignored,” he says.

He highlights the rise of Central Bank Digital Currencies (CBDCs) as having the potential to revolutionise the way transactions are conducted and monitored.

CBDCs present a valuable opportunity to gain immediate visibility of transactions and economic activities, serving as a powerful instrument for fostering financial stability by tackling risks linked to conventional banking systems.

A recently published report by the European Central Bank underscored the advantages of CBDCs in mitigating these risks, including reduced costs stemming from high transaction fees and the expenses associated with cash management.

“Additionally, digital currencies offer the potential to facilitate cross-border trade and remittances by providing faster, cheaper, and more secure payment solutions.

“This has the potential to enhance economic cooperation and international transactions,” Tjaronda says.

STRICT RULES

Shiimi has not assigned a regulatory authority for virtual assets within the country yet.

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 legislation, 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.