Windhoek-Taking note of a rise in the interest in cryptocurrencies, the Bank of Namibia (BoN) has doubled-down on its stance on these virtual currencies, warning the public that it does not recognise these digital currencies as legal tender in Namibia. As such, cryptocurrencies are not considered as an authorised foreign currency and, therefore, cannot be exchanged for the Namibia Dollar.
“The market prices of cryptocurrencies are highly volatile, fluctuate significantly on a daily basis and are unstable with no underlying substantive value. Cryptocurrencies, therefore, do not meet the minimum standards of any credible currency,” said BoN’s Deputy Director for Corporate Communication, Kazembire Zemburuka.
He added that because of the unregulated nature of cryptocurrencies, individuals that engage in such trading would be doing so at their own risk, and as a result would be exposing themselves to financial losses due to the lack of regulatory protection.
“Equally, the bank continues to be concerned with potential abuses, including money laundering and associated risks, which have been highlighted as major threats associated with cryptocurrencies worldwide,” said Zemburuka, who noted that BoN would continue to monitor these developments and their impact on the functions of the central bank.
A recent position paper by BoN on cryptocurrencies makes a clear distinction between virtual currencies, or cryptocurrencies, and electronic money (e-money) by stating that e-money is a digital representation of legal tender currency, which is also referred to as fiat currency. BoN notes that in its digital form, e-money still carries its original value equivalent to that of its legal tender currency. Another notable distinction is that the supply of e-money depends on the fiat money in circulation, which is controlled by the central bank, while the supply of virtual currencies solely depends on the issuer’s decision or the community that uses or controls the specific virtual currency.
“Virtual currencies are not legal tender and are considered unsafe to users that are unaware of the risks it possesses.
The bank does not consider virtual currencies to be the equivalent to the Namibian currency despite there being similarities from the functions of money and measure of value perspective. Additionally, the trading of virtual currencies in Namibia is not currently regulated and individuals that engage in such trading would be doing so at their own risk and should exercise caution,” reads the bank’s position paper.