Friday, September 30, 2022

Crypto currencies: Here is what Botswana’s central bank thinks

Bitcoin has been controversial since its beginning some 12 years ago, as have the subsequent cryptocurrencies that followed in its wake. While widely criticised for their volatility, their use in nefarious transactions and for the exorbitant use of electricity to mine them, cryptos are being seen by some, particularly in the developing world, as a safe harbour during economic storms.

In Botswana, as more people turn to cryptos as either an investment or a lifeline, the central bank has finally shared its views on them.

“There is no specific legal or regulatory framework pertaining to, or proscribing investment, in crypto assets, such as Bitcoin in Botswana,” reads part of a statement released by the bank this week.

Given this view, Bank of Botswana says trading in Bitcoin or similar decentralised technologies is akin to investment in any other intangible assets with attendant risks, inherent in such investments, such as complete loss of value or possible abuse of the technologies to the detriment of investors.

Through a statement, BoB has put out five-pointers to address the growing interest and queries around crypto assets investments.

The bank says reference to crypto assets as currencies is a misnomer because they do not exhibit the key fundamental and complimentary characteristics of money or currency.

“Other than addressing and responding to activities that contravene the provisions of the Bank of Botswana Act, (CAP 55:01); Banking Act (CAP 46:04); National Clearance and Settlement Act, (CAP 46:06); Financial Intelligence Act, 2019 and other statutes and regulations administered by the Bank, the public would have no recourse to the Bank of Botswana for redress pertaining to fraud, misconduct, or financial losses emanating from or associated with participation in the crypto assets business”, cautioned the central bank.

In the global space, the legal status of cryptos varies substantially from country to country, while in some, the relationship remains to be properly defined.

In Botswana, the central bank says it acknowledges the potential for pervasive and significant effect of the crypto assets business on its functions and mandates and, in general, the broader financial sector of the country.

“There is continuing monitoring of developments by both the Bank and the Financial Stability Council, for the necessary response as may be warranted,” reads part of the BoB statement issued this past week.

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