July 8, 2023

Namibia Passes Law on Regulating Cryptocurrencies, VASPs

Cryptocurrency in Namibia

Cryptocurrency in Namibia

Namibia is keen on joining other African countries in creating a legal environment for cryptocurrencies and digital assets after passing a bill on regulating digital assets, virtual asset service providers (VASPs), and cryptocurrencies. 

The draft law, which was approved by the Namibian National Assembly, aims to create a framework for licensing and regulating VASPs in addition to establishing a regulatory body to supervise these VASPs and their operations in the country, according to Cointelegraph

The bill also targets 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 providing for incidental matters.

To come into effect, the law has to be published in the official publication. In this regard, Namibian Minister of Finance and Public Enterprises Iipumbu Shiimi pointed to the establishment of the regulatory authority to govern the virtual assets, saying: “This governing body will assume the responsibility of licensing virtual asset service providers and overseeing, supervising and monitoring activities related to the provision of virtual asset services.”

It is worth mentioning that in 2017 the Bank of Namibia took an opposition stance against the use of cryptocurrencies as a method of payment for goods and services. 

Earlier in November, the International Monetary Fund (IMF) called for more regulation of the crypto industry and greater consumer production in African countries, according to a blog published by the global financial institution.

IMF referred to policymakers’ concerns that cryptocurrencies could be used to illegally transfer funds out of Africa and get around local rules to prevent capital outflows. The blog said: “Widespread use of crypto could also undermine the effectiveness of the monetary policy, creating risks for financial and macroeconomic stability.”

Despite being one of the fastest-growing crypto markets in the world, Africa’s crypto market is still the smallest in terms of crypto transactions reaching $20 billion per month in mid-2021, according to Chainalysis. Africa’s crypto market increased in value by more than 1,200% between July 2020 and June 2021.

The blog mentioned that South Africa, Nigeria, and Kenya top the African continent in terms of the number of crypto users. It is worth mentioning that the Central African Republic is the first country in Africa to designate Bitcoin as a legal tender.

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