BoN targets unlicensed crypto operators

The Bank of Namibia (BoN) has warned against unregulated digital asset service providers, insisting that while cryptocurrency trading remains open to Namibians, only licensed operators will be allowed to handle customer funds under tighter regulatory oversight aimed at preventing investor losses and financial fraud.

Deputy Governor of the Bank of Namibia, Leonie Dunn, told the Parliamentary Standing Committee on Economy, Industry, Public Administration and Planning on Tuesday that regulation is critical to protect consumers from losses and fraud in an increasingly complex financial landscape.

"We do not stop Namibians from investing in digital assets. What we are asking is that those who provide these services to Namibians must be licensed and authorised by the Bank of Namibia," Dunn said.

She warned that unregulated operators pose a significant risk to consumers, particularly when companies disappear with investors' funds.

"If they take your money and disappear, there is no recourse," she said.

Dunn said licensing would ensure that virtual asset service providers maintain sufficient capital buffers to safeguard clients' funds.

"If we license and regulate them, we ensure they have a buffer of capital held in a safe place. That way, if something goes wrong, there is a mechanism to recover funds and support the system," she said.

Protection frameworks

The central bank is also exploring ways to strengthen broader consumer protection frameworks, including expanding the Namibian Deposit Guarantee Authority's mandate to potentially cover losses incurred through virtual asset service providers.

"We are also looking at how we can further expand the Namibian Deposit Guarantee Authority to ensure that consumers are protected when they lose money through a virtual asset service provider," Dunn said.

She confirmed that Namibians are allowed to invest in Bitcoin and other digital assets, provided they comply with existing foreign exchange controls. "There are limits on how much money can be taken out of Namibia. If you want to transfer larger amounts, you require approval under the Currencies and Exchanges Act," she explained.

Dunn added that the Bank of Namibia is closely monitoring developments in tokenised money, digital currencies and other emerging financial technologies, saying the regulator is building capacity to keep pace with innovation.

"We are keeping a close eye on developments and doing a great deal of work to understand tokenised money, tokenised deposits and digital currencies," she said.

Beyond digital assets, Dunn also addressed concerns about ownership in the banking sector, stressing that localisation requirements are embedded in law and are intended to protect financial stability.

"It is governed by law. We have the figures showing how localised they are," she said, adding that systemically important banks must comply with ownership and transformation targets.

She said one bank is now fully Namibian-owned, while others are progressing with plans to increase local shareholding. "We expect them to continue implementing their plans because we want to see greater Namibian participation and ownership in our banking institutions," she said.

Dunn also defended the strict regulatory framework governing banks, saying it is designed to protect depositors and maintain financial stability. "The money that banks hold belongs to shareholders and depositors. They cannot use it as they wish," she said.

Responsible lending

She emphasised that banks must lend responsibly and ensure borrowers can repay their loans, warning that reckless lending ultimately puts depositors' funds at risk. "If a borrower cannot repay, the depositor's money is lost in the process," she said.

Dunn also highlighted government efforts to expand access to finance for small and medium-sized enterprises, including a N$500 million state-backed guarantee scheme and reforms aimed at incorporating alternative credit data, such as mobile payment histories, into lending assessments.

"Why can't small entrepreneurs get a loan at eight o'clock in the morning and repay it by five o'clock in the afternoon with interest? Why can't those people access finance?" she asked.

She said the Bank of Namibia would continue refining its regulatory approach to balance innovation, financial inclusion and stability, adding that a dedicated technical session with lawmakers may be needed to unpack the full regulatory framework.