Centralized exchange in Botswana

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 NBFIRA with supervisory powers and licensing requirements.

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.

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.

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.

Botswana’s current dedicated virtual‑asset legislation is the Virtual Assets Act, 2025 (Act No. 4 of 2025, S.I. 9 of 2025), which regulates the sale and trade of virtual assets and the licensing of virtual asset service providers and issuers of initial token offerings; the earlier citation to a “Virtual Assets Act, 2022 (Act No. 19 of 2022, published in the Botswana Government Gazette on 27th May 2022)” is no longer accurate as the operative Act is now the 2025 statute.

Section 5: Prohibits any person from carrying on a virtual asset business or virtual assets service without a license issued by NBFIRA.

Section 3 (Definitions): Defines a "virtual asset service provider" (VASP) to include any person who, as a business, "provides custody or administration of virtual assets or instruments enabling control over virtual assets."

Section 15: Requires a licensed VASP to "at all times maintain adequate and appropriate systems of control and procedures for the proper administration of its affairs." This provision is broad enough to encompass requirements for client asset segregation to prevent co-mingling and protect client funds in case of VASP insolvency.

Section 15(1)(a): Requires a licensed VASP to "implement appropriate measures to safeguard the virtual assets under its custody or control against theft, loss, or damage."

Section 15(1)(b): Requires a VASP to "implement a robust information technology framework to manage risks, including cybersecurity and operational resilience."

Section 15(1)(d): Requires a VASP to "at all times maintain adequate financial resources for the proper performance of its functions." While not directly mandating insurance, adequate financial resources could implicitly cover potential liabilities.

Section 18: Grants NBFIRA the power to issue directives and practice notes to VASPs concerning various matters, which would include detailed operational requirements like asset segregation.

Proceeds of Serious Crime Act (POCA), Cap 08:06: This is the overarching legislation that criminalizes money laundering and terrorist financing, and provides for the confiscation of proceeds of crime.

Financial Intelligence Act (FIA), No. 17 of 2019: This Act establishes the Financial Intelligence Agency (FIA) and outlines the obligations of accountable institutions (which now explicitly include VASPs) regarding customer due diligence, record-keeping, and suspicious transaction reporting. It replaced the 2009 Act.

NBFIRA's Virtual Assets Business Regulatory Framework and Guidance Notes: NBFIRA has issued a comprehensive framework and specific guidance notes, such as the "Guidance Notes on Anti-Money Laundering and Combating the Financing of Terrorism for Virtual Asset Service Providers" (e.g., published in November 2022), which directly detail AML/CFT obligations for VASPs. These are crucial for specific requirements.

Identification and Verification of Customers:

National identity number (e.g., Omang for citizens), passport number, or other official identification document number.

Residential address (verified with utility bills, bank statements, or other official documents).

Source of funds and source of wealth (especially for high-risk customers or large transactions).

Purpose and intended nature of the business relationship.

Beneficial Ownership Identification:

VASPs must identify and verify the identity of the beneficial owner(s) of customers, including for legal persons and legal arrangements.

For legal persons, this typically means identifying individuals who ultimately own or control 25% or more of the shares or voting rights, or otherwise exercise control over the entity.

Ongoing Due Diligence and Monitoring:

Monitoring the business relationship and transactions undertaken throughout the course of the relationship to ensure they are consistent with the VASP's knowledge of the customer, their business, risk profile, and, where necessary, the source of funds.

Keeping customer information up-to-date and verifying it periodically.

Non-Bank Financial Institutions Regulatory Authority (NBFIRA) is the primary established regulator for Virtual Asset Service Providers (VASPs) under Botswana's Virtual Assets Act, 2025. However, Botswana-specific evidence does not explicitly confirm that NBFIRA has been active in issuing public warnings.

Botswana enacted the Virtual Assets Act, 2025, which vests the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) with supervisory powers and requires VASPs to be licensed, representing a fully enacted framework rather than the still-implementing 2022 bill.

Issuing warnings and advisories to the public about the risks associated with cryptocurrencies and unregistered virtual asset service providers (VASPs).

Bank of Botswana (BoB): The central bank, which has generally maintained a cautious stance on cryptocurrencies, focusing on financial stability and consumer protection.

Financial Intelligence Agency (FIA): Responsible for AML/CFT supervision and analysis. The FIA often highlights the risks associated with virtual assets in its national risk assessments.