Bank of Namibia Rejects Bitcoin Exchanges on Basis of 50-Year-Old Law
Digital Currency Exchanges Illegal Under Law, Says Bank of Namibia
Namibia’s central bank, Bank of Namibia, has claimed that virtual currency exchanges have no place in the African country, under its decades-old law. The central bank also announced that merchants in the country may not accept cryptocurrencies, like Bitcoin, as payment for goods and services.
In its latest position paper as of mid-September 2017, the Bank of Namibia explained that Bitcoin and other digital currencies present only a “minimal” threat to its monetary policymaking role. However, it claimed that the cryptocurrencies are not authorized in the country under the Exchange Control Act of 1966.
Part of the position paper reads:
"In addition to the bank not recognizing virtual currencies as legal tender in Namibia, it also does not recognize it to be a foreign currency that can be exchanged for local currency. This is because virtual currencies are neither issued nor guaranteed by a central bank nor backed by any commodity."
Other highlights of the central bank’s position paper
The Bank of Namibia mainly cited previous reports by the International Monetary Fund (IMF) and the Financial Action Task Force (FATF) in its position paper. Among the familiar points that it raised, are the possible use of digital currencies on money laundering activities, the perceived shortcomings of a currency without support by a government or a commodity, and the potential benefits of the cryptocurrencies’ underlying distributed ledger technology, or Blockchain technology to the financial system.
The central bank reiterated that it cannot endorse any activity involving virtual currencies, despite their ability to facilitate remittances and other consumer payments due to the lack of a legal premise.
"Virtual currencies cannot be used to pay for goods and services in Namibia. For example, a local shop is not allowed to price or accept virtual currencies in exchange for goods and services. Users of virtual currencies should, therefore, exercise caution when dealing in this type of currencies or when comparing it to e-money.”
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Jennifer Keith is an entrepreneur and advocate for diversity and equality. She has a degree in biology and enterprise management. For the past couple of years, she has worked with tech companies in the fintech industry for their strategic partnerships. You may connect with her on Twitter.