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Bank of Namibia Cracks Down on Crypto Investment Schemes

The Bank of Namibia (BoN) has taken a bold step in cracking down on crypto investment schemes, alleging that they are conducting banking business without authorization.

Background

According to sources, BoN issued instructions to NedBank and Standard Bank to freeze all bank accounts held by the founder of an investment club, citing non-compliance with the Banking Institutions Act. This move has raised concerns about the central bank’s approach to regulating cryptocurrency and its impact on investors.

The Law

The Banking Institutions Act defines banking business as:

• Accepting deposits or similar funds from the public
• Soliciting or advertising for such funds
• Obtaining money through the sale of an asset subject to an agreement to repurchase at a future date

Critics argue that the act was drafted in 1998, before the advent of cryptocurrency, and is therefore inadequate to regulate this new market.

Criticism

The BoN’s decision has been met with criticism from some quarters, who argue that it is not within the central bank’s mandate to make laws or interpret legislation in a way that stifles innovation. Instead, they suggest that BoN should engage with stakeholders to create a sustainable solution for regulating cryptocurrency.

Conclusion

While the exact scope of the Banking Institutions Act remains unclear, one thing is certain: cryptocurrency is here to stay, and more Namibians will invest in it. In light of this, it is advisable to exercise caution when conducting crypto investments, lest you attract the ire of the central bank.

Disclaimer

This article is for information purposes only and should not be considered legal advice. Readers are advised to consult their attorneys for specific guidance on this matter.