Namibia: Virtual Assets ‘Remain Without Legal Tender Status’ but Merchants Can Still Accept Them as Payment

The Bank of Namibia recently said it has brought virtual assets and virtual asset service providers under its fintech innovations regulatory framework, and that it plans to amend applicable laws and regulations. According to the central bank’s governor, there is an ongoing “battle between regulated and unregulated money on the one hand and sovereign versus non-sovereign money on the other.”

Amending Applicable Laws

The Bank of Namibia (BON) has said that while cryptocurrencies have no legal tender status in the country, it has now brought “virtual assets (VA) and virtual assets service providers (VASP) under its Fintech Innovations Regulatory Framework in a phased approach, through its innovation hub.” The central bank added it is also considering amending “applicable laws and regulations diligently in consultation with other relevant authorities.”

In a recently issued statement, the BON also clarified that even though privately issued digital currencies are still not legally recognized, merchants and traders can accept payment in this form provided they are “willing to participate in such an exchange or trade.”

The bank’s new position on digital currencies appears to suggest the BON may be warming up to cryptocurrencies. The central bank has in the past said it did “not recognise, support and recommend the possession, utilisation and trading of cryptocurrencies by members of the public.” The bank also warned Namibians there would be no legal recourse in the event they lost money.

CBDCs Hold ‘Immense Potential Benefit’

However, Johannes Gawaxab, the BON governor and a past critic of cryptocurrencies, is quoted in the statement acknowledging the future of money is now a critical point. He explained:

The future of money is at an inflection point. The battle between regulated and unregulated money on the one hand, and sovereign versus non-sovereign money on the other.

Still, Gawaxab said he believes central bank digital currencies (CBDCs) offer something which privately issued or created digital currencies cannot. The BON governor nonetheless cautioned that his organization, which is also exploring and studying the feasibility of rolling out a CBDC, will not be rushed into doing this.

“If CBDCs are explored and implemented with due care and caution, they could hold immense potential benefit for a more stable, safer, more widely available, and less expensive means of payment than private forms of digital money,” said Gawaxab.

Meanwhile, the BON revealed that it planned to release a consultation paper on CBDCs in October.