Namibia, one of the African nations at the forefront of embracing cryptocurrencies and digital assets, has taken a significant step towards regulating this emerging market. On June 22, the National Assembly of Namibia approved a bill. This bill aims to establish a comprehensive framework for licensing and regulating virtual asset service providers (VASPs) operating within the country.
Further, under the newly passed legislation, Namibia seeks to create a robust framework that will govern the operations of VASPs. These providers, including digital asset exchanges and custodial wallet services, will now be subject to oversight by a regulatory authority appointed for this purpose.
This regulatory body will be responsible for supervising VASPs and ensuring compliance with the established guidelines and regulations.
Protecting Consumers and Combating Illicit Activities
The primary objective of the bill is to safeguard consumer interests and prevent market abuse. Additionally, it will help mitigate the risks associated with money laundering, terrorism financing, and proliferation activities related to digital asset markets.
By enacting this law, Namibia aims to instill confidence in the nascent crypto industry and create a safe environment for investors and users of digital assets. Furthermore, the legislation addresses various ancillary matters associated with these objectives.
Following its approval in the National Assembly, the bill is currently awaiting official publication. It will it will come into effect after this. Reports suggest that Iipumbu Shiimi, the Minister of Finance and Public Enterprises, has already expressed the government’s plans to establish a regulatory authority tasked with overseeing and granting licenses to VASPs in Namibia.
Penalties for Noncompliance and the Bank of Namibia’s Stance
To ensure adherence to the new regulations, the bill stipulates penalties for noncompliant providers. Those found in violation could face penalties of up to 10 million Namibian dollars ($671,572) and a maximum prison term of 10 years. However, it is worth noting that the Bank of Namibia maintains its position that cryptocurrencies do not hold legal tender status within the country.
Kazembire Zemburuka, the Bank of Namibia’s director of strategic communications and international relations, reiterated the bank’s stance on virtual assets. Zemburuka stated that the bank will evaluate the associated risks of innovations such as virtual assets. This will help them make a decision regarding their acceptance within the country’s financial system once these risks are effectively managed.
A Long-Standing Position on Cryptocurrencies
It is not the first time the Bank of Namibia has expressed its reservations about cryptocurrencies. Back in 2017, the bank vehemently opposed their use as a method of payment for goods and services. At that time, the bank declared that virtual currency exchanges were incompatible with the existing laws of Namibia.
By establishing a framework for licensing and supervision, the country aims to foster responsible growth and protect its citizens while actively participating in the evolving digital economy.
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