The Bank of Botswana (BOB) has said the country does not have a specific legal or regulatory framework pertaining to crypto assets. The bank does, however, warn residents investing in cryptocurrencies that they will have no legal recourse should they suffer financial losses.
Central Bank Responding to Public Inquiries
In its statement released on November 10, the central bank starts by acknowledging that local residents, just like their counterparts around the world, are engaged in cryptocurrency trading. In addition, the BOB also acknowledged that it has been receiving and responding to public and media inquiries on the subject.
Next, the statement shares some of the observations that were made by the central bank when it monitored developments in the increasing trade of crypto assets.
“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,” explained the BOB press statement.
While the BOB insists there will be no legal recourse for cryptocurrency investors that lose money to fraudulent schemes, the bank does urge investors to “undertake due diligence on the registration and legality of the business, as well as the nature of the business activity, including the manner of generation and source of returns.”
Cryptocurrency Not Real Currency
The central bank’s statement also suggests that the underlying activity of some of the companies engaged in crypto trading may relate to pyramid schemes and scams. As such, the BOB again warned investors engaged in cryptocurrency trading that they could be “participating in criminal activity.” This from the BOB’s standpoint means these crypto investors may be “liable for prosecution and/or exposure to a significant risk of financial and asset losses.”
In the meantime, the statement also makes known the BOB’s views concerning the classification of cryptocurrencies as currencies. According to the central bank, this reference to cryptocurrencies is misguided because these do not exhibit the key fundamental and complementary characteristics of money or currency such as being a stable store of value.
Cryptocurrencies also fail as a unit of account or a medium of exchange that is widely accepted, according to the BOB. More importantly, from the BOB’s perspective cryptocurrencies have no backing by the state or central bank with respect to legal tender status, transferability, exchange, or value.
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