Namibia Takes Step Towards Crypto Regulation with New Law, but Clarity Remains Elusive
Namibia has made significant strides towards regulating the cryptocurrency sector with the passage of the Virtual Assets Act. The law sets out licensing requirements for firms and mandates the appointment of a regulator to oversee the industry. While providing a framework for future legislation, it lacks clarity on how crypto will be treated by regulators, according to local legal experts.
Licensing Requirements and Regulatory Oversight
The new law requires a regulator to oversee the sector, but a watchdog has yet to be chosen, leaving many wondering how a chosen regulator might treat crypto. To obtain a license, firms must be incorporated in Namibia and have a registered office in the country. Failure to comply could result in up to 10 years of imprisonment or a penalty of NAD 10 million ($671,572).
Consumer Protection and Anti-Financial Crime Provisions
The law also sets requirements for consumer protection, preventing market abuse and money laundering. However, lawyers say it is only the first step towards setting up a comprehensive regulatory strategy.
Crypto Tax Framework
Namibia needs a crypto tax framework that is “fit for purpose,” said Ronald Nanub, economist at the Office of the Prime Minister in Namibia. The country does not currently tax digital assets, even for capital gains.
Regulatory Authority and Powers
Under the new law, the chosen crypto regulator will have powers to license virtual asset service providers and make new rules. However, some areas, such as the structure and expertise of the regulatory authority, are still unclear. “Flexibility is good, but we do not want to see those powers being taken beyond proper limits,” said Jamie Theron, senior associate at DLA Piper Africa (ESI) Namibia.
Future Regulatory Framework
A regulatory framework on how banks should treat fintech and a central bank position paper on crypto regulation, which suggests allowing merchants to accept crypto as payment if they wish, hint at how the country may go on to regulate the sector.
Uncertainty Remains
The new law will come into effect on a date determined by Namibia’s finance minister. While progress has been made, many questions remain unanswered, and the future of cryptocurrency in Namibia remains uncertain.
Key Takeaways
- The Virtual Assets Act sets out licensing requirements for firms and mandates regulatory oversight.
- A regulator has yet to be chosen, leaving uncertainty about how crypto will be treated.
- Consumer protection, anti-financial crime provisions, and a crypto tax framework are still lacking.
- The law provides flexibility but raises concerns about the powers of the regulatory authority.