Virtual Assets Market ‘Poses Limited Risks to Financial Stability’

The Botswana Monetary Stability Council’s October 2024 report states that the digital belongings market and fintech cyber dangers at present pose minimal threats to monetary stability..

Technological progress will increase dangers to monetary stability

Authorities in Botswana consider that each the digital asset market and cyber dangers arising from monetary know-how (fintech) are comparatively underdeveloped and at present pose minimal threats to monetary stability. Nonetheless, the October 2024 Monetary Stability Council report warns that these dangers may improve as technological innovation inside the fintech sector progresses. Actually, the report identifies the dangers related to a rising fintech sector as one of many high 5 potential threats emanating from the monetary system.

Botswana is likely one of the few African international locations taking steps to manage cryptocurrencies, regardless of their nascent market. As reported by Bitcoin.com Information in January 2022, Botswana has launched a digital belongings invoice alongside 5 different legislative proposals, demonstrating a daring step in the direction of the popularity of crypto belongings.

The report speculates that Botswana’s recognition of cryptocurrencies was partly motivated by a need to deal with deficiencies within the anti-money laundering and terrorist financing regime, as recognized by the Monetary Motion Process Pressure (FATF).

In the meantime, the council’s monetary stability report highlights ongoing efforts to scale back vulnerabilities within the know-how panorama to assist monetary stability, together with the institution of a fintech working group.

“A Nationwide Fintech Working Group was established on January 30, 2024 to satisfy the wants
strategic path on Fintech issues. The working group was particularly established to develop an inclusive Nationwide Fintech Technique and a Fintech Analytical Evaluation
Framework that facilitates the event of the monetary companies sector, according to nationwide priorities in cost techniques,” the report stated.

In accordance with the report, the fintech working group consists of key nationwide stakeholders together with the Financial institution of Botswana, authorities businesses, regulators and monetary companies infrastructure suppliers.

The report additionally highlights the chance of rising digital platforms that “promote the anonymity of transactions.” These platforms improve the potential for Botswana getting used as a conduit for cash laundering or elevating funds for terrorist actions.

The monetary stability report identifies a number of measures to mitigate these dangers, together with enhanced exterior monitoring of digital asset service suppliers. Frequent cooperation with the digital belongings trade, market surveillance and cooperation with different regulation enforcement businesses to detect unlawful operators are additionally talked about as attainable measures.