The rise of cryptocurrencies brought the promise of decentralization. Many joined and invested in hopes of escaping regulatory frameworks from central banks and politics.
Though this has changed over time. Many countries have started imposing regulations on crypto platforms and trading. Even then, some countries still allow cryptocurrency deals without regulation.
One is Botswana. BOB (Bank of Botswana) has stated that it lacks a specific regulatory or legal framework for crypto assets. However, the bank does advise caution to its residents, especially with a lack of legal prosecution if financial losses do occur.
Bank of Botswana – Responses to Public Speculation
The bank released a statement on November 10th outlining some key concepts. It begins with acknowledging that Botswana’s residents do engage in cryptocurrency trading. Also, the bank does acknowledge its responsibility in receiving inquiries and responding to the media and public on the topic.
The following statements outline observations that the central bank saw as it monitored changes in local crypto asset trading.
“There is no specific legal or regulatory framework pertaining to, or proscribing investment, in crypto assets, such as bitcoin in Botswana. Therefore, trading in bitcoin or similar decentralised technologies, also known as ‘cryptocurrency’, 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,” mentioned in a recent press statement.
While BOB reminds the public that there is no legal fallback to fraudulent crypto schemes, it does encourage investors to do their due diligence in checking their investments’ legality and registration, in addition to understanding the nature of their business activities (such as income sources and products offered).
Does Botswana Doubt the Legitimacy of Cryptocurrencies?
Some of the bank’s statements do imply that.
Its statements suggest that much of the activities surrounding crypto assets may involve scams and pyramid schemes. As a result, the bank has warned invested parties that they might be supporting criminal activities.
From the BOBs viewpoint, this means that crypto investors are at risk of prosecution if they greatly invest in a hidden criminal activity (or alternatively, of great asset losses).
The statement also provides insight into the bank’s view on how it classifies cryptocurrencies. Currently, the central bank seems to see cryptocurrencies as suspicious, where they do not exhibit the key principles that define money and currency, especially as a reliable storage of value.
Additionally, the bank seems to see that cryptocurrencies fail as an exchange medium and account unit with widespread acceptance. This is reflected in the state’s legislation, with the obvious lack of backing with regards to exchange and value, legal tender, and transfer potential.
Lack of Regulation – Is it an Advantage?
It may be so. While BOB warns of crypto risks, many investors may see it as an opportunity to cash in without worrying about regulations, taxes, or accountability.