Members of Parliament across the political divide demonstrated rare bipartisan unity as the Virtual Assets Bill, which will regulate cryptocurrency trades among others, was passed by the National Assembly this week.
The Bill now awaits President Mokgweetsi Masisi’s assent to pass into law, as required by the Constitution.
The new Bill expands the Non-Bank Financial Institutions Regulatory Authority’s (NBFIRA) mandate to include licensing providers of virtual asset services, such as cryptocurrencies, as well as regulating and monitoring the issuance of virtual assets and persons conducting virtual asset businesses in Botswana. NBFIRA is also being tasked with developing rules, guidance and codes of practice in connection with the conduct of virtual asset businesses.
Presenting the Bill last week, Finance and Economic Development minister, Peggy Serame said Virtual Assets and Virtual Assets Service Providers (VASP) are a new sector in most jurisdictions and face significant money laundering and terrorist financing risks.
Botswana, which recently exited a three-year stay on a global adverse listing for its money laundering standards, had to tighten its legislation and remain in line with global standards while also ensuring that businesses could be confident of the operating environment in the country.
“In October 2019, the Financial Action Task Force took action, through revisions to its standards relating to Virtual Assets and VASPs, to respond to the very real risk that legitimate services offered by VASPs may be abused by criminals and terrorists to launder money and finance terrorist acts,” she said. “Based on the foregoing, Botswana is introducing new legislation, which has been rendered necessary with a view to meeting international standards of the FATF by making provisions for managing, mitigating and preventing money laundering and financing of terrorism and proliferation risks associated with those emerging business practices.”
The Financial Action Task Force (FATF) is the world’s leading anti-money laundering agency with more than 200 countries and jurisdictions implementing its standards.
The Bill received support from legislators with Selebi Phikwe West legislator, Dithapelo Keorapetse saying the legislation would help protect Batswana from a highly risky and speculative sector where some have fallen prey to scammers.
He, however, added that it was important that education is incorporated into the regularisation of cryptocurrencies, as many citizens were currently ignorant of the potential of virtual assets.
“What needs to be done is that we need to start with public education around virtual assets, especially known ones such as Bitcoin,” he said. “We need to also quickly infuse virtual assets into our curriculum. We have Business Studies at primary schools, but we must infuse this in the curriculum so that we have future millionaires and billionaires from trading these.”
He added the country should have long developed laws and regulations around cryptocurrency, given that its most popular asset, Bitcoin, kicked off as far back as 2009. Keorapetse said research ought to have already been conducted on the impact of virtual asset trading on the economy, money laundering, illicit financial flows and criminal activity.
“We ought to have adequately trained our law enforcement about this sector as well. “There has been an exodus of well-trained investigators from the public sector going into the private sector, now what more of law enforcement and a complex area like virtual assets? “Without established regulations and oversight, the virtual asset space will become the Wild West of the financial sector.”
Nkange MP Never Tshabang and Mahalapye West legislator, David Tshere also spoke in support of the Bill.
With the passing of the Bill, Botswana becomes the second country in Africa to formally regulate cryptocurrencies after Mauritius, while South Africa expects to finalise its regulations soon. Other countries on the continent either have no laws or are generally critical of virtual assets.