Botswana’s Central Bank Pushes For Crypto Regulations Amid Future Risks

TLDR;

• Botswana’s Central Bank urges proactive crypto regulation to mitigate future risks.
• The risks noted are money laundering, terrorism financing, and economic instability.
• The bank recommends AML/CFT compliance and stronger oversight.
• Matches with global trends in crypto regulation.

Currently, Botswana is one of the countries where cryptocurrencies are not yet mainstream. Although there aren’t any threats damaging the financial stability of Botswana, its Central Bank is still urging the country to issue regulations for cryptocurrency. The Central Bank wishes to address possible risks now rather than bear the damage later on.

The Bank of Botswana also noted the increasing global ties that traditional financial systems have with cryptocurrency markets in its Financial Stability Report. The report warned against possible risks that may destabilize the country’s economy.

A Call For Proactive and Preventative Regulation

The Bank believes there is a serious need for a solid oversight framework that will protect the Botswana economy from unknown threats posed by the emergence of digital assets. Even though Botswana’s cryptocurrency market is minimal, the report states there is a lot of growth in financial technologies. Therefore, when the cryptocurrency market becomes bigger and more complex, the risks could be amplified in the future.

A major issue highlighted was that of digital currencies being used for criminal activities such as terrorist financing and money laundering. The concern was highlighted because the decentralized digital currencies are anonymous, making them attractive for illegal activities. The Bank even ranked these threats as one of the top 5 national security risks, stating that:

“The evolution of digital platforms and digital payment instruments that promote anonymity of transactions present an opportunity for money laundering in the financial sector.”

Therefore, the Bank wants crypto exchanges in the country to strictly comply with the Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) regulations. The Bank also suggests increased market surveillance as well as more collaborative efforts with law enforcement agencies to prevent illegal activities in this sector.

A Global Trend in Crypto Regulation

Botswana’s stance aligns with the global trend of crypto legislation and regulation. Recently, countries like the United Kingdom and Taiwan have introduced frameworks to address risks in the evolving digital asset market.

Taiwan has increased its anti-money laundering (AML) requirements for the crypto businesses. In the same way, the UK is planning to introduce detailed regulations and policies in the upcoming year. UK wishes to consolidate the rules for Stablecoins and virtual assets.

Meanwhile, the USA may see a more pro-crypto environment with lenient policies that encourage crypto businesses to grow under the presidency of Donald Trump.