Cryptocurrencies remain banned in the country, the Bank of Namibia maintained recently in its latest position paper on virtual currencies.
The bank said it does not recognise, support or recommend the possessing, utilisation and trading of cryptocurrencies in Namibia by members of the public.
It warned that Namibians who trade in cryptocurrencies will have no recourse to the bank in the event of financial loss or misfortune as they are unregulated.
A cryptocurrency is a form of digital currency that has two key differences which distinguishes it from traditional money. Cryptocurrencies are not issued or regulated by any government or central authority, making them a currency only used on the internet.
“The growing interest of buying and trading in cryptocurrencies continues to provide opportunities for investors seeking instant fortunes and higher than usual returns from investments,” the central bank warned.
It said this state of affairs is likely fuelled by the challenging economic conditions and the apparent lack of understanding about cryptocurrencies by members of the public.
Cryptocurrencies are prone to risks such as being used in criminal activities including fraud, money laundering and pyramid schemes due to their unregulated, anonymous and secretive nature.
Cryptocurrencies may be seen as a store of value, to those investing in them, which implies that they can be used to save monetary value which can be retrieved and exchanged at a later time and be predictably useful when retrieved, but they have been extremely unpredictable and volatile since their introduction.
“Overall, market analysis has shown that cryptocurrencies have been less effective than fiat currency at maintaining a relatively stable value to goods and services.”
The central bank warned that anyone who engages in mining, online trading and exchanging of cryptocurrencies is subject to the Financial Intelligence Act, which may attract a fine not exceeding N$100 million or to imprisonment for a period not exceeding 30 years, or to both such fine and such imprisonment.
The central bank said it strongly discourages the practice of soliciting funds from the public to invest or trade in cryptocurrencies on their behalf.
“The public is reminded to refrain from cryptocurrencies and related activities, since cryptocurrencies could be used as a platform for illegal financial activities, like pyramid schemes, unauthorised banking business, money laundering, terrorist financing and proliferation activities,” the bank said.