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Namibia has taken a significant step in regulating its cryptocurrency market as the government recently signed a new law to oversee Virtual Asset Service Providers (VASPs) operating within the country. This marks a notable reversal of the country’s original decision in 2017 to ban cryptocurrency exchanges.
The VASP-regulating law, known as the Namibia Virtual Assets Act 2023, was approved by Namibia’s National Assembly on July 6 and subsequently signed by President Hage Geingob on July 14. On July 21, the law was officially inserted into the Gazette of the Republic of Namibia. This new legislation aims to establish a regulatory authority responsible for supervising and overseeing crypto exchanges in the country. It represents the first comprehensive law laying out regulations for cryptocurrency-related activities in Namibia.
The law will take effect on a date to be determined by Namibia’s Ministry of Finance.
One of the primary objectives of the law is to ensure consumer protection and prevent market abuse, as well as to address the risks of money laundering and the financing of terrorism associated with virtual assets. To enforce compliance, non-compliant VASPs could face penalties of up to 10 million Namibian dollars ($671,000) and a maximum of 10 years in prison.
It is important to note that despite this regulatory development, the country’s central bank, the Bank of Namibia, maintains its stance that cryptocurrencies will not be considered legal tender in Namibia.
Namibia’s decision to regulate cryptocurrency exchanges is part of a growing trend among several African nations. Other countries on the continent, including Botswana, Kenya, Mauritius, and Seychelles, have also passed cryptocurrency-related laws. However, it is worth mentioning that some African countries, such as Cameroon, Ethiopia, Lesotho, Liberia, Republic of the Congo, Sierra Leone, Tanzania, and Zimbabwe, have opted to enforce a ban on cryptocurrencies, according to the International Monetary Fund (IMF).
As the law comes into force, Namibia seeks to strike a balance between regulating the cryptocurrency market and fostering innovation while addressing potential risks and protecting consumers and investors within the digital asset industry.
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