Stablecoin issuer / redeemer in Botswana

Botswana has moved beyond the initial Virtual Assets Act, 2022 registration regime to a full licensing regime for VASPs, overseen by the Financial Intelligence Agency (FIA). The FIA website (https://www.fia.org.bw/) remains the authoritative source for VASP licensing guidelines.

Stablecoins are regulated under the Virtual Assets Act, 2025 and/or the Investment and Securities Act, 2025 in Botswana, not under the superseded Virtual Assets Act, 2022.

The VAA defines a 'virtual asset' as a digital representation of value that can be digitally traded or transferred and used for payment or investment purposes, but explicitly excludes digital representations of fiat currencies and closed-loop items, which may narrow the scope for fiat-backed stablecoins.

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)

Securities: It is less likely for typical fiat-backed stablecoins to be classified as securities unless they grant rights akin to equity (e.g., profit-sharing, voting rights) or represent a claim on future revenue streams of an enterprise. The Non-Bank Financial Institutions Regulatory Authority (NBFIRA) oversees securities.

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.

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.

Algorithmic Stablecoin Rules:

The BoB has previously issued warnings about the risks associated with cryptocurrencies, stating they are not legal tender and are unregulated. This skepticism would extend strongly to algorithmic stablecoins.

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.

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.

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.

Non-Bank Financial Institutions Regulatory Authority (NBFIRA)

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."

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.

The Value Added Tax (Amendment) Bill, No. 22 of 2025 explicitly proposes to expand the VAT base by introducing a definition for 'digital assets', which will govern the VAT treatment of cryptocurrencies in Botswana.