Botswana -- Licensing Requirements Regulatory Overview

**Licensing Regime:** Botswana operates under a strict **licensing regime** for Virtual Asset Service Providers. This means that any entity wishing to conduct VASP activities in or from Botswana must apply for and obtain a specific license from NBFIRA before commencing operations. It is not merely a registration process; it involves a thorough application, due diligence, and ongoing compliance.

The Virtual Assets Act, 2025 now provides the overarching legal framework for virtual assets and VASPs in Botswana, vesting supervisory powers in NBFIRA and requiring licensing of VASPs.

**Virtual Assets Regulations, 2023 (VAR 2023):** These regulations provide the detailed operational and licensing requirements, including application procedures, capital requirements, AML/CFT obligations, and ongoing supervisory standards. The VAR 2023 became effective on **May 26, 2023**.

**Exchanges (Exchange between Virtual Assets and Fiat Currencies / Exchange between one or more forms of Virtual Assets):**

Entities operating cryptocurrency exchanges that allow users to buy/sell virtual assets with fiat currency (e.g., BWP, USD) or trade one virtual asset for another (e.g., Bitcoin for Ethereum) fall directly under the VASP definition and require a license.

**Custody Providers (Safekeeping and/or administration of Virtual Assets or Instruments enabling control over Virtual Assets):**

Entities offering custodial services for virtual assets, meaning they hold or control private keys on behalf of clients, are considered VASPs and must be licensed. This applies to both institutional and retail custody solutions.

**Payment Processors (Transfer of Virtual Assets):**

Entities that facilitate the transfer of virtual assets on behalf of another natural or legal person (e.g., sending/receiving virtual assets as a payment service, or processing virtual asset transactions) are considered VASPs and require a license. This encompasses services that act as intermediaries for virtual asset payments.

Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset (e.g., ICO/STO services).

Any other activity as prescribed by the Minister through regulations.

**Legal Entity and Local Presence:**

Applicants must be a company **incorporated in Botswana** under the Companies Act.

They must maintain a **physical office** in Botswana.

Senior management and key personnel are expected to be based in Botswana or demonstrate sufficient local oversight.

The VAR 2023 specifies minimum capital requirements based on the scope of activities:

**Principal VASP License:** **BWP 500,000** (Botswana Pula) in unimpaired capital. This typically covers the full range of VASP activities.

**Limited VASP License:** **BWP 200,000** in unimpaired capital. This may be for VASPs with a narrower scope of activities or those determined by NBFIRA to pose lower risk.

In addition to capital, NBFIRA may require a **security deposit** or other financial guarantees to protect clients.

Botswana is actively tightening its AML/CFT financial sanctions regime to address identified weaknesses, indicating the framework is being reformed rather than remaining a stable cornerstone already fully aligned with FATF standards.

**Robust Policies and Procedures:** VASPs must implement comprehensive internal AML/CFT policies, procedures, and controls.

**AML/CFT Compliance Officer:** Appointment of a qualified and experienced AML/CFT Compliance Officer, approved by NBFIRA, who reports to senior management and the Board.

**Customer Due Diligence (CDD):** Implementing strong CDD measures for all customers, including identifying and verifying the identity of natural and legal persons, and beneficial owners.

**Enhanced Due Diligence (EDD):** Applying EDD for higher-risk customers or transactions.

**Record Keeping:** Maintaining records of customer identification data, transaction data, and business correspondence for at least 5 years.

**Suspicious Transaction Reporting (STRs):** Reporting suspicious transactions and activities to the Financial Intelligence Agency (FIA) in Botswana.

**Sanctions Compliance:** Screening customers and transactions against national and international sanctions lists.

**Travel Rule:** Compliance with the FATF Travel Rule for virtual asset transfers, requiring VASPs to obtain and transmit originator and beneficiary information.

**Governance, Management, and Fit & Proper:**

**Fit and Proper Requirements:** Directors, senior management, and significant shareholders (e.g., 10% or more ownership) must meet NBFIRA's "fit and proper" criteria, including good repute, integrity, competence, and financial soundness.

**Organizational Structure:** A clear and effective organizational structure with well-defined lines of responsibility.

**Risk Management:** Robust frameworks for identifying, assessing, monitoring, and mitigating all relevant risks, including operational, financial, cyber, and legal risks.

Botswana's IT infrastructure, systems, and controls have been found failing and vulnerable, prompting the passage of the Cybersecurity Act, 2025, to address gaps in cybersecurity coordination and infrastructure reliability.

**Cybersecurity:** Comprehensive cybersecurity policies and measures to protect customer data and virtual assets.

**Business Continuity and Disaster Recovery:** Adequate plans to ensure continuous operation and recovery in case of disruptions.

Measures to protect client assets and information.

Clear and transparent disclosure of fees, risks, and terms of service.

A detailed, viable business plan outlining the VASP's operations, target market, financial projections, and compliance strategy.

**Pre-Application Consultation (Recommended):** NBFIRA encourages prospective applicants to engage in an initial consultation to discuss their proposed business model and understand the regulatory requirements.

**Preparation of Application:** The applicant compiles a comprehensive application package, including:

Duly completed application forms (prescribed by NBFIRA).

Legal entity documents (certificate of incorporation, memorandum, and articles of association).

Audited financial statements are required for non-exempt existing entities in Botswana, and since the Companies (Amendment) Act, 2025, this requirement now explicitly includes dormant companies as well.

Proof of capital (e.g., bank statements).

AML/CFT policies and procedures manual.

Botswana is undertaking a decisive reset of its financial integrity systems to address weaknesses in anti-money laundering and counter-terrorism financing frameworks, indicating that the risk management framework is being actively changed and strengthened.

CVs, "fit and proper" declarations, and police clearances for directors, senior management, and significant shareholders.

Fee schedule and client agreement templates.

**Submission of Application:** The complete application package is submitted to NBFIRA.

**Due Diligence and Review by NBFIRA:** NBFIRA reviews the application, conducts due diligence on the entity and its key personnel, and may request additional information or clarifications. This may involve interviews.

**Decision and Licensing:** If all requirements are met and NBFIRA is satisfied, it will grant a VASP license. NBFIRA has the discretion to grant or refuse a license.

**Ongoing Compliance:** Licensed VASPs are subject to ongoing supervision by NBFIRA, including regular reporting, audits, and compliance checks.

**Virtual Assets Act, 2022 (VAA 2022):**

**Virtual Assets Regulations, 2023 (VAR 2023):**

These regulations detail the implementation of the VAA. They were gazetted on May 26, 2023.

**Non-Bank Financial Institutions Regulatory Authority (NBFIRA) Website:** https://www.nbfira.org.bw/

This is the main regulatory body. Their website is the authoritative source for application forms, guidance, and updates.

Look for sections related to "Virtual Assets" or "Licensing Requirements" under "Regulatory Frameworks" or "Supervised Entities."

**NBFIRA Virtual Assets Information Page (if available):** (Specific direct link to VA section if found, otherwise the main page is the entry point). NBFIRA generally publishes directives and application documents for regulated entities.

**Financial Intelligence Act:** This act forms the basis for Botswana's broader AML/CFT framework, which VASPs must also comply with.

**Financial Intelligence Agency (FIA):** https://www.fia.org.bw/ (For AML/CFT guidance and STR reporting)

shares or debentures of a company;

stocks, bonds, or other instruments creating or acknowledging indebtedness;

any right, warrant, or option in respect of a share, debenture, stock, bond, or other instrument;

Under Botswana's Virtual Assets Act, 2025, crypto instruments are regulated as a distinct class of virtual assets, not subsumed under the general definition of securities or capital market instruments.

**An investment of money (or other asset):** Purchasers exchange value for the token.

**In a common enterprise:** The funds are pooled, and the success of the token's value or the project behind it is interdependent among investors.

**With an expectation of profit:** Purchasers expect to derive financial gain from their ownership of the token (e.g., through appreciation, dividends, staking rewards, governance rights leading to value).

**Derived from the efforts of others:** The expected profits or increase in value primarily come from the entrepreneurial or managerial efforts of the issuer or a third party (e.g., the development team, foundation, or management of the underlying project).

**Investment Tokens (Security Tokens):** Tokens explicitly designed to represent an ownership stake in an enterprise, a share in profits, voting rights in a company, or a claim on future revenues are almost certainly classified as securities. This includes most Initial Coin Offerings (ICOs) that promise future returns or equity-like participation.

**Utility Tokens (with investment characteristics):** While a "pure" utility token (solely providing access to a product or service) may not be a security, many utility tokens are marketed with investment potential, where their value is tied to the success of a platform built and managed by others. If the primary motive for purchase is speculative profit derived from the efforts of the issuer, it would likely be deemed a security.

**NFTs (with investment characteristics):** Non-Fungible Tokens that merely represent digital art or collectibles might not be securities. However, NFTs that confer rights to passive income, fractional ownership in a real-world asset managed by a third party, or are part of a broader investment scheme would likely be classified as securities.

**Payment Tokens/Cryptocurrencies (e.g., Bitcoin, Litecoin):** Generally, these are not considered securities if their primary function is as a medium of exchange or store of value, and their value is not derived from the managerial efforts of a central issuer or common enterprise in the same way. These would fall under the Virtual Assets Act for AML/CFT purposes but not as securities.

**Registration/Prospectus Requirements:** The issuer would generally be required to register the security with NBFIRA and issue a prospectus in accordance with the **Securities Act**. A prospectus must contain all material information necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profits and losses, and prospects of the issuer and the rights attaching to the securities.

**Exemptions:** The Securities Act provides for certain exemptions from prospectus requirements, such as offerings to sophisticated investors, private placements, or offerings to a limited number of persons. The issuer would need to ensure they strictly meet the criteria for any claimed exemption.

**Licensing:** Issuers, and any intermediaries involved in the offering, may need to be licensed by NBFIRA as securities dealers, brokers, or investment advisors, depending on their activities.

**Exchange Licensing:** Any platform facilitating the secondary trading of such tokens would likely need to be licensed by NBFIRA as a **securities exchange** or operate under an exemption.

**Broker-Dealer Licensing:** Entities facilitating the buying and selling of these tokens on behalf of clients (brokers) or trading for their own account (dealers) would need to be licensed by NBFIRA.

**Market Conduct Rules:** Standard market conduct rules for securities trading, including prohibitions against market manipulation, insider trading, and other illicit practices, would apply.

**AML/CFT:** Even if not a security, all secondary trading activities involving virtual assets are subject to the AML/CFT requirements under the **Virtual Assets Act, 2022**, meaning VASPs (exchanges, custodians, etc.) must be licensed by NBFIRA and adhere to strict reporting and due diligence obligations.

Issue directives to cease illegal activities.

Impose administrative penalties and fines.

Seek court orders for injunctions or disgorgement of illicit gains.

Cooperate with law enforcement for criminal prosecution in cases of fraud.

(Look for circulars, press releases, or guidance under 'Publications' or 'News').

This act can typically be found on the Attorney General's Chambers website for Botswana laws, or via legal databases. A direct government URL for the latest consolidated version may vary, but here's a common way to find legislation: https://www.botswanalaws.com/ (You would search for "Securities Act").

This is a newer act. You would similarly look for it on the Attorney General's Chambers site or legislative databases.

An example link to a legal database that often hosts these (though may require subscription): https://www.lexisnexis.com/ or similar regional legal platforms.

Botswana Government Gazette often publishes new acts. For example, it came into force via the Statutory Instrument No. 71 of 2022.

These regulations accompany the VAA and provide detailed rules for VASPs.

Again, found via legislative resources.