In a significant shift, the Namibian Government has officially signed a law to regulate Virtual Asset Service Providers (VASPs) operating in the country, overturning its previous decision to ban cryptocurrency exchanges back in 2017. The VASP-regulating law, known as the Namibia Virtual Assets Act 2023, was inserted into the Gazette of the Republic of Namibia on July 21, following its approval in the National Assembly on July 6 and subsequent signing by President Hage Geingob on July 14.
The new law aims to establish a regulatory authority responsible for overseeing crypto exchanges within the country. It marks the first time Namibia has outlined a comprehensive framework for regulating cryptocurrency-related activities. The law will come into effect on a date determined by Namibia’s Ministry of Finance.
The primary objectives of the legislation are to ensure consumer protection, prevent market abuse, and mitigate the risks of money laundering and the financing of terrorism. Non-compliant VASPs may face severe penalties, including fines of up to $671,000 (equivalent to 10 million Namibian dollars) and a potential prison sentence of up to 10 years. Despite this regulatory development, the Bank of Namibia maintains that cryptocurrencies will not be considered legal tender in the country.
Namibia’s journey towards cryptocurrency regulation started in May 2018 when the Bank of Namibia revised its initial decision to ban cryptocurrency exchanges, signaling a change in its approach to this emerging digital asset class.
Interestingly, South Africa’s financial regulator recently announced a similar move, requiring all cryptocurrency exchanges to obtain licenses by the end of 2023 to continue their operations.
Several other African nations have also introduced cryptocurrency laws, with Botswana, Kenya, Mauritius, and Seychelles among them. However, the situation in some countries remains fluid, as seen in the case of the Central African Republic, where Bitcoin was briefly made legal tender in April 2022 before the legislation was repealed less than a year later.
On the other hand, some African countries have enforced a ban on cryptocurrencies, including Cameroon, Ethiopia, Lesotho, Liberia, the Republic of the Congo, Sierra Leone, Tanzania, and Zimbabwe, as reported by the International Monetary Fund.
The Namibian Government’s decision to regulate cryptocurrency exchanges signals a growing acceptance of digital assets in Africa, with other nations likely to follow suit in shaping their own regulatory frameworks for this evolving sector. As the continent embraces these new opportunities, the future of cryptocurrencies in Africa remains intriguing and full of potential.