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Namibian Central Bank: Bitcoin Purchases Illegal Under Law
A paper from the Bank of Namibia makes familiar points about the risks of money laundering and the perils of a stateless currency.
Updated Dec 10, 2022, 9:22 p.m. Published Sep 14, 2017, 9:00 a.m.
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Cryptocurrency exchanges are not allowed in Namibia under a decades-old law, and merchants in the African country may not accept them as payment for goods and services, the nation's central bank has said.
In a new nine-page position paper,https://www.bon.com.na/CMSTemplates/Bon/Files/bon.com.na/f9/f94d2a6a-dd7c-4080-9ffe-8e77b5e85909.pdf the Bank of Namibia said bitcoin and its progeny pose only a "minimal" threat to the central bank's monetary policymaking role.
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It also made familiar points about the risks of money laundering from cryptocurrencies, the alleged shortcomings of a currency without government or commodity backing, and the potential benefits the financial system could achieve through its underlying distributed ledger technology.
The paper heavily cites previous research by the International Monetary Fund and the Financial Action Task Force, a global intergovernmental anti-money-laundering organization. In other statements, it further elaborated on its interpretation of relevant domestic law.
For example, Namibia's Exchange Control Act of 1966 "does not make provision for the establishment of virtual currency exchanges or bureaus in Namibia," the central bank said.
The paper continued:
"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."
While the report acknowledges that cryptocurrencies can be used to facilitate remittances and other consumer payments, by trading into and out of fiat currencies, it said that "due to the lack of a legal premise, the bank is unable to endorse such activities in Namibia at the moment."
Even exchanging bitcoin for a cup of coffee is forbidden, apparently.
"Virtual currencies cannot be used to pay for goods and services in Namibia," the central bank said. "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," meaning fiat currency in digital form.
Namibian currency image via Shutterstock.
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