In another big win for crypto and worldwide adoption, Namibia has become the latest country to adopt virtual assets into its ecosystem by passing a law that regulates the activities of Virtual Asset Service Providers (VASPs) carrying out business in the country. The law passed by the country’s legislature on July 6 was assented to by the President on July 14 and made public in the government’s Gazette on July 21.
Namibia’s VASP-Regulating Law
Namibia’s Virtual Assets Service Providers (VASP) Act 2023 will regulate crypto exchanges’ operations. However, for now, there is no exact date when the law will enter into force as Namibia’s Ministry of Finance is tasked with determining the law’s effective date, and no date has been chosen yet.
The introductory part of the law already gives insight into its aim. It reads:
To provide licensing and regulation of virtual asset service providers; to designate a Regulatory Authority to regulate and supervise virtual asset service providers and related activities, for purposes of ensuring consumer protection, preventing market abuse and preventing or mitigating the risk of money laundering and financing of terrorism and proliferation activities posed by virtual assets markets; and to provide for incidental matters.
According to the law, Virtual Assets Service Providers must be duly licensed to operate in the country, and anyone who fails to do so faces a penalty, upon conviction, of 10 million Namibian dollars or imprisonment of not exceeding more than 10 years.
There is, however, still a grey area in all of this as the Bank of Namibia remains adamant about recognizing cryptocurrencies as legal tender despite this new VASP Act. As such, it is unclear whether transactions made in crypto will be punishable by law.
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Namibia’s History Of Crypto
This development is more significant considering that Namibia had earlier in 2017 banned crypto exchanges and the use of crypto to transact in the country. Then, the country’s central bank, the Bank of Namibia, declared that such digital asset exchanges were illegal under the Exchange Control Act of 1966.
The central bank also warned traders in the country not to accept cryptos like Bitcoin as a means of payment for goods and services. As such, this U-turn by the Government of Namibia is a welcome development that comes with regulatory certainty regarding how crypto exchanges can operate in the country.
The move by Namibia points to the changing climate toward crypto on the continent as African countries are warming up to introducing crypto into their economy alongside a regulatory environment to provide certainty to the industry.
Recently, South Africa’s financial markets regulator announced that crypto exchanges must obtain a license before the end of the year to continue operations in the country.
Other countries like Kenya, Botswana, Mauritius, and Seychelles already have crypto-related laws and are making their countries a crypto-friendly region.