Crypto operators face licensing deadline, steep fines
Cryptocurrency operators active in the local market have until May 25 to secure operating licences from the NonBank Financial Institutions Regulatory Authority (NBFIRA) or face fines of up to P250,000 and/or five years in jail, BusinessWeek can reveal.
This comes as the Virtual Asset Act and its regulations came into effect on February 25, with a grace period of three months for operators to regularise. The new Act and its regulations make Botswana one of a handful of countries in the world to attempt to regulate the multi-billion pula crypto market. Parliament passed the Act in an emergency sitting in February as part of a wide-ranging effort to plug loopholes in the country’s money-laundering and financing of terrorism response.
“Entities offering virtual assets business that do not become licensed within the specified timeframe granted by the Act will be considered illegal operators after May 25, 2022,” NBFIRA’s communications and international affairs, Boa Ntebele told BusinessWeek. Under the Act, anyone who carries out an illegal virtual asset business or contravenes the Act where no specific penalty is provided is liable to a fine not exceeding P250,000, imprisonment for a term not exceeding five years, or both. Anyone who knowingly fails to disclose any fact or information required by the Act is liable to a fine not exceeding P100,000, imprisonment for a term not exceeding two years,orboth.
Destroying, concealing or falsifying physical or electronic information relevant to the NBFIRA’s supervisory mandate can be fined up to P1 million, imprisoned for not more than eight years, or both. Cryptocurrency and virtual token operators wishing to secure licences will be required to provide extensive details on owners, investors, technical and financial expertise and maintain adequate capital, amongst other requirements. NBFIRA also requires an application fee of P5,000.
Ntebele told BusinessWeek the regulator had received several enquiries regarding licensing requirements, but no applications had been received as yet. Asked what success NBFIRA expected to achieve in regulating a sector whose major players are located outside the country and who mainly do not operate from physical addresses, Ntebele said the regulator would work with its international peers.
“Section 3(b) of the Act states that it applies to ‘any person carrying on a virtual asset business irrespective of the physical location from which the activity is carried out’.
“Solid collaboration between regulators of virtual asset service providers in different countries will be important, especially in instances where such platforms or operators are also licensed in other countries.
“The Authority will, therefore, work closely with its regulatory peers in matters involving operators based outside the country,” she said.
“The Authority is currently doing the requisite groundwork in preparation for implementing the Virtual Assets Act.”
NBFIRA recently partnered with the Botswana Investment Professionals Society to raise awareness on cryptocurrency and forex scams, which are reportedly trapping high numbers of victims in the country.
“We have had complaints about people putting in thousands of pula into an electronic platform somewhere with people that they did not know and at some point, they seemingly get returns which entice them to put more money,” Juliana White, NBFIRA’s Capital Markets director previously told