Namibia pivots on crypto, will regulate — not ban — digital assets with new law
The bill was signed by Namibian President Hage Geingob on July 14
Useacoin/Shutterstock modified by Blockworks
A little less than six years after Namibia outlawed the exchange of virtual currencies, the country this week passed a crypto bill laying out a local path forward for the industry.
Following the president signing the bill in mid-July and additional procedural steps, Namibia’s Virtual Assets Act of 2023 has officially become law.
This law represents a significant departure from Namibia’s long-held position on crypto.
In September 2017, Namibia’s central bank penned a paper arguing that based on its reading of a 1961 law, it was illegal to “establish virtual currency exchanges or engage in activities that provide or facilitate the conversion or exchanging of virtual currencies.”
The central bank took a slight step back from that stance in May 2018, saying cryptocurrencies “may be used as a payment instrument to pay merchants on the internet for goods and services.” It still said setting up cryptocurrency exchanges was illegal.
Despite its softened stance, in 2021, the central bank professed it wouldn’t help the victims of crypto scams.
Two years later, the law Namibia endorsed will focus on protecting consumers and mitigating money laundering and terrorism financing risks. It intends to do so with the establishment of a regulatory authority that will be charged with supervising virtual asset service providers (VASPs).
According to the law, the authority has the power to license VASPs, appoint inspectors for investigations, and take enforcement action against license holders. VASPs are a structure for overseeing financial entities that have been employed elsewhere, including the UAE.
Firms are subject to different license classifications depending on their functions. There’s a license for initial token offerings, virtual asset broker-dealers, wallet services, custodians and advisory services.
License holders also must be incorporated in Namibia and must comply with additional financial laws and regulations.
Another key provision seemingly excludes central bank digital currencies (CBDCs) or other equivalents from scrutiny, because the law says “virtual assets” don’t include “digital representations of fiat currencies.”
As of October 2022, the Bank of Namibia is currently researching CBDCs, according to the Atlantic Council’s tracker.
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