Despite the introduction of new crypto rules, the Bank of Namibia has made no official statement on accepting cryptocurrency as legal tender.
Namibia is now among the African countries that are trying to regulate the activities of virtual asset service providers (VASPs). The bill that is intended for reaching this goal passed the lower House of Parliament on June 22. It establishes a structure to license and regulate VASPs and their work. The National Assembly of Namibia approved the bill on July 6, and on July 14, it was signed by President Hage Geingob. The text of the document was published in the Gazette of the Republic of Namibia on July 21.
The Essence of the New Regulations for Virtual Asset Service Providers
The recently signed bill aims to protect crypto users and implement structures to reduce money laundering and other illegal activities associated with virtual assets. However, the date of enforcement for the new law remains unclear, as it will be determined by the country’s Ministry of Finance.
The essence of the law, as stated in the release, is to “provide for the licensing and regulation of virtual asset service providers; designate a Regulatory Authority to supervise virtual asset service providers and related activities to ensure consumer protection, prevent market abuse, and mitigate the risk of money laundering, financing of terrorism, and proliferation activities posed by virtual assets markets; and provide for incidental matters.”
The Bank of Namibia objected to the use of crypto in the country, declaring it illegal for payment of goods and services through papers released in 2014 and 2017, as well as reiterated this stance in their ‘Revised Position on Cryptocurrencies’ in May 2018. The new law by the government reflects a little shift in the country’s authorities’ stance on the use of crypto.
Failure to comply with the stated law may result in a fine of 10 million Namibian dollars, a 10-year prison sentence, or both. According to the release, “a licence holder that is a token issuer who fails to give written notice to the Regulatory Authority or make a disclosure pursuant to subsection (1), commits an offence and is liable upon conviction to a fine not exceeding N$10,000,000 or imprisonment for a period not exceeding 10 years, or to both such a fine and such imprisonment.”
Despite the introduction of the new crypto law, the Bank of Namibia has made no official statement on accepting cryptocurrency as legal tender. As a result, using cryptocurrencies to pay for goods and services may still result in legal consequences.
Several African countries, including South Africa, Botswana, Kenya, and Mauritius, are also defining the use of cryptocurrencies and regulating virtual asset providers in their respective jurisdictions. South Africa, for example, now requires cryptocurrency exchanges to be recognized as financial service providers and obtain licenses from the Financial Sector Conduct Authority (FSCA) by the end of the year. They also have to adhere to strict management and compliance frameworks.