Bank Of Namibia: Use Of Cryptocurrencies Prohibited Within Country
The Bank of Namibia has issued a position paper that interprets two longstanding Namibian legal acts to be prohibitive of the commercial use of cryptocurrencies and offering no legal basis to support the establishment of virtual currency exchanges in Namibia. The pronouncement stops short of explicitly deeming such exchanges illegal but implores users to exercise caution should they engage in the trading of cryptocurrencies.
Though the Bank made no reference to any legal penalties that users might incur for spending cryptocurrency, it was unequivocal in stating that “a local shop is not allowed to price or accept virtual currencies in exchange for goods and services.” Currently, the Namibian dollar and South African rand are “the only two legal tender currencies in Namibia.”
The document goes on to warn the public that without an “entity licensed to run the virtual currency system … the user bears the responsibility and the entire risks [sic] for transacting in virtual currency.” This lack of a central issuing authority appears to be a sticking point for the bank, which describes itself as possessing the “sole mandate to serve as the state’s instrument to control money supply and to create and issue currency.”
The institution does not appear threatened by the limited presence of cryptocurrency in Namibia’s economic landscape, however, explaining that its impact “on the Bank’s role as the sole custodian of money creation and supply in Namibia is minimal.”
Additionally, citing a report by the inter-governmental Financial Action Task Force, the proclamation cautioned that cryptocurrencies “are potentially vulnerable to money laundering and terrorist financing abuse.”
Nonetheless, the Bank seems open to revisiting the issue in the future, stating that, “this technology is seen to have the potential of transforming financial sector infrastructure and consequently, the operations. The Bank intends to conduct further research on the plausible uses [of] distributed ledger technologies and establish a position accordingly.”