Business Reporter
NAMIBIA has enacted the country’s first legislation to license and regulate Virtual Asset Service Providers (VASPs) and Initial Token-Offering Service Providers (ITOSPs). This makes Namibia the third Sub-Saharan African country to take bold legislative steps to regulate this sector and fully protect the public against potential risks associated with services offered by this industry.
However, virtual currencies will not enjoy legal tender status like the Namibian Dollar. Acceptance of virtual currencies for the payment of goods and services will be at the discretion of any merchant and buyer willing to participate in such an exchange or trade.
The Virtual Assets Act, 2023 (Act No. 10 of 2023) (VAA) became operational on 25 July 2023 and will be administered by the Bank of Namibia.
Before this landmark legislation, Namibia recognized virtual assets as a growing avenue for generating and laundering proceeds of crime, with the banking sector and members of the public being the major targets.
Kazembire Zemburuka, spokesperson for the Bank of Namibia (BoN), said that the Act aims to reduce the risks associated with investing in virtual assets, a warning previously issued by BoN to the public. The Financial Intelligence Centre (FIC) will continue to carry out the Anti-Money Laundering and Combatting the Financing of Terrorism and Proliferation (AML/CFT/CPF) registration, licensing, and supervision role over the industry.
Zemburuka emphasized that the main objective is to ensure effective prevention and combatting of Money Laundering, Terrorist and Proliferation financing, as well as other financial crimes and abuse of the financial system. Therefore, VASPs and ITOSPs must comply with AML/CFT/CPF obligations under the Financial Intelligence Act, 2012 (Act No. 13 of 2012), as amended.
The Governor of the Bank of Namibia, Johannes !Gawaxab, remarked on the newly assigned and additional regulatory mandate: “The monetary system consists of money and payment systems. The ability of the monetary system to function effectively depends on the public’s confidence in the system. New technologies, products, and related services have the potential to spur financial innovation and efficiency and improve financial inclusion, but they also create opportunities for criminals to launder their proceeds or finance their illegal activities. In addition, it is important to regulate virtual assets, virtual asset activities, and VASPs, as these also, besides opportunities, have AML/CFT/CPF, financial stability, and monetary policy implications. The move to prudentially and AML/CFT/CPF regulate virtual assets thus is a major step to provide greater legal and regulatory certainty to both the public and the financial services industry.”
To ensure a comprehensive and easily implementable regime, the Bank is also in the process of finalizing rules, which contain operational requirements for the VASPs and ITOSPs. The Rules include, but are not limited to, cybersecurity, travel rules, capital, cyber, and risk requirements. The Bank will conduct consultation processes for the said Rules during August 2023 with the industry players.
