Namibia has joined the ranks of countries incorporating virtual assets into their financial ecosystems. With the recent enactment of a law regulating Virtual Asset Service Providers (VASPs), Namibia establishes a framework for overseeing crypto exchanges’ activities within its borders. The law was passed by the country’s legislature on July 6, received presidential assent on July 14, and was officially made public in the government’s Gazette on July 21.

Known as the Virtual Assets Service Providers (VASP) Act 2023, this legislation will effectively regulate the operations of crypto exchanges. However, the law’s implementation date remains undecided, pending the determination by Namibia’s Ministry of Finance.

The introduction section of the law provides valuable insight into its objectives. It aims to establish licensing and regulations for virtual asset service providers, assign a Regulatory Authority responsible for overseeing and supervising VASPs while ensuring consumer protection, preventing market abuse, and mitigating the risks associated with money laundering, financing of terrorism, and proliferation activities related to virtual assets markets. Additionally, the law covers incidental matters pertaining to this domain.

Under the new law, all Virtual Asset Service Providers will require a valid license to operate within Namibia. Failure to comply may result in penalties, including a conviction-related fine of up to 10 million Namibian dollars, or imprisonment for a period not exceeding ten years.

However, despite this progressive legislation, uncertainties remain regarding the status of cryptocurrencies as legal tender within Namibia. The Bank of Namibia continues to dispute their recognition, making it unclear whether transactions carried out using cryptocurrencies might face legal repercussions.

This recent development carries additional weight when considering Namibia’s previous stance on cryptocurrencies. In 2017, the country banned crypto exchanges and the use of virtual assets for transactions within its borders. The central bank, Bank of Namibia, labeled these digital asset exchanges as illegal under the Exchange Control Act of 1966. Furthermore, it cautioned traders against accepting cryptocurrencies like Bitcoin as a means of payment for goods and services. Hence, the government’s change of heart showcases a welcome shift towards regulatory certainty, facilitating the operation of crypto exchanges within Namibia.

Namibia’s embrace of cryptocurrencies reflects a broader changing sentiment towards virtual assets on the African continent. Several African nations, such as South Africa, Kenya, Botswana, Mauritius, and Seychelles, have already established crypto-related laws and frameworks, fostering a crypto-friendly environment within their territories.

Moreover, South Africa’s financial markets regulator recently mandated that crypto exchanges must secure licenses before the year’s end to continue their operations. This move, alongside Namibia’s regulatory progress, highlights the growing recognition of the potential benefits of cryptocurrencies and the necessity for well-defined guidelines to navigate this evolving financial landscape.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.