Crypto-funded debit card 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):

Payment Processors (Transfer of Virtual Assets):

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.

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.

Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Guidelines: Issued by the FIA and NBFIRA, these guidelines provide specific instructions for regulated entities, including VASPs, on how to implement their AML/CFT obligations, including sanctions compliance.

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).

Beneficial Ownership Identification:

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

Ongoing Due Diligence and Monitoring:

E-money/Payment Tokens: Depending on their design and intended use, fiat-backed stablecoins could also fall under the purview of e-money or payment tokens as regulated by the National Payment System Act, 2018.

If a stablecoin is designed to function as an electronic store of monetary value for making payments, is denominated in fiat currency (like BWP), and is redeemable at par, the Bank of Botswana (BoB) would likely classify its issuer as an Electronic Money Issuer (EMI).

Reference: National Payment System Act, 2018 (Available on the Bank of Botswana website or Botswana Parliament Website)

Under National Payment System Act (NPS Act) (if classified as e-money): If a stablecoin issuer is licensed as an Electronic Money Issuer (EMI) by the Bank of Botswana, they would be subject to stringent reserve requirements.

EMIs are typically required to hold funds equivalent to the e-money issued in highly liquid and low-risk assets (e.g., central bank money, government bonds) in segregated accounts, ensuring 1:1 backing and safeguarding of customer funds.

Under the VAA, stablecoins classified as general virtual assets are governed by consumer protection laws and contractual agreements, with oversight primarily for AML/CFT. However, specific redemption rights for stablecoins are not detailed in the VAA.

VASPs must be licensed and regulated by the Financial Intelligence Agency (FIA) in Botswana, primarily for Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) purposes.

The standard corporate income tax rate is 22%.

Rates typically range from 0% to a maximum of 25% on taxable income above certain thresholds.

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.

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.