The Bank of Botswana (BOB) has said that the nation lacks a formal legislative or regulatory framework governing digital assets. However, the bank warns citizens who invest in cryptocurrencies that they would have no legal recourse if they incur financial losses.
The Botswana central bank acknowledges, in a statement issued on November 10, that local citizens, like their counterparts throughout the world, participate in cryptocurrency trading. Furthermore, the BOB stated that it had received and responded to public and media questions on the matter.
Following that, the statement highlights some of the central bank’s findings made while monitoring trends in the growing trading 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 Bank of Botswana press statement.
While the BOB insists that cryptocurrency investors who lose money to fraudulent schemes will have no legal recourse, the bank does advise 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.”
According to the central bank’s announcement, the underlying activities of some of the organizations involved in crypto trading may be related to pyramid schemes and frauds. As a result, the BOB once again cautioned bitcoin traders that they may be “engaging in illegal behavior.” According to the BOB, this indicates that these cryptocurrency investors may be “liable for prosecution and/or exposed to a considerable risk of financial and asset losses.”
Meanwhile, the statement expresses the BOB’s position on the designation of cryptocurrencies as currencies. This reference to cryptocurrencies, according to the central bank, is misleading since they do not display the main fundamental and complementary features of money or currency, such as being a reliable store of value.
According to the BOB, cryptocurrencies also fail as a universally acknowledged unit of account or means of exchange. More crucially, in terms of legal tender status, transferability, exchange, or value, cryptocurrencies have no support from the state or central bank, according to the BOB.