Parliament on Tuesday debated a proposed amendment bill meant to regulate the sale and trade of virtual assets, licencing of virtual assets service providers and issuers of initial token offerings as well as to provide for other related matters.

Presenting the draft amendment bill which came under certificate of urgency, Vice President and Minister of Finance, Mr Ndaba Gaolathe said the intention was to repeal and re-enact with amendments, the Virtual Assets Act No 3 of 2023 to enable a comprehensive legislative framework that would regulate the business activities of Virtual Assets Service Providers (VASP), and Initial Token of Offerings.

He said that the amendment would therefore, ensure conformity to international standards of Financial Action Task Force (FATF).

“To achieve this, the bill therefore, made provisions for the management, mitigation and prevention of money laundering and financing of terrorism as well as proliferation risks associated with this emerging business practices,” he said.

Mr Gaolathe said the regulation of VASPs would enable among others, safety and soundness of the virtual assets business, high standard of conduct, fairness, efficiency and orderliness of the sector, enhancement of stability in the financial system as well as reduction and deterrence of financial crime.

“In that regard, the Virtual Assets Bill will establish a legal framework for the licencing, regulation and supervision of VASPs by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA),” he said.

He said during its meeting in September 2022, the Eastern and Southern Africa Anti-Money Laundering Group observed that there were some drafting deficiencies in the definition of VASP, which did not comply with the FATF standards.

Mr Gaolathe said due to additional changes introduced in the Virtual Assets Act No 3 of 2022, a re-enactment with amendments was therefore, necessary.

He said that the bill consisted of six parts, the first part being a provision for preliminary matters such as the interpretation of silent words and terms used in the bill for ease of implementation of the law.

He said part two of the bill provided for NBFIRA’s functions under the bill, such as powers to request information and documentation relating to the business activities of VASPs.

Mr Gaolathe said the third part covered licencing of virtual assets businesses by the regulatory authority among others, while part four indicated obligations of license holders, such as prevention of market abuse and protection of clients’ assets.

He said part five of the bill outlined the professional conduct and compliance measures that licence holders should adhere to, while the last part provided for the general offences and penalties for any contravention of the provision of the act.

Apart from giving the relevant minister regulatory powers, the re-enactment of the Virtual Assets Act will also enhance regulatory monitoring, supervision, protection and promotion of financial stability as well as foster innovation in the financial sector, Mr Gaolathe said.

Making input after presentation of the bill, Nkange legislator, Mr Motlhaleemang Moalosi appreciated government’s efforts to protect the country from unnecessary grey listings.

He also indicated a need to educate Batswana on what virtual assets were since most were not in the know.

Mr Moalosi said that Batswana had lost money through attempted investment in virtual assets markets, only because of lack of education.

He however, admitted that virtual assets provided a lucrative market, if it was regulated hence pleaded with government to relax regulations to make foreign investment easier.

For his part, Kanye West MP, Mr Victor Phologolo reiterated the need for public education, especially among the youth as they were the ones more active in the virtual assets market.

He said this was more so that criminals had found a lucrative market in technologically naive countries such as Botswana.

“In that regard, this law will be handy in protecting people,” he said.

Mr Phologolo said virtual assets market was good in that it could be one way of job creation as envisaged by the UDC government.

Serowe West legislator, Mr Onalepelo Kedikilwe said bringing such a bill to Parliament was an indication that government was concerned about past experiences.

Mr Kedikilwe said it was important for Botswana not to be seen skating anywhere near grey-listing and therefore, called for penalties to be clear and stiff for those who would violate the act. ENDS