Botswana's central bank is calling for proactive regulations in the cryptocurrency market to mitigate potential risks.
The bank's latest Financial Stability Report emphasizes the need to establish frameworks to oversee emerging threats in the local crypto market.
While the domestic virtual asset market currently poses minimal risks to financial stability, the potential for systemic risks is growing.
The report also raises concerns about misconduct and the risks of money laundering and terrorist financing in the evolving crypto landscape.
To address these risks, the Bank of Botswana recommends implementing Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) regulations for virtual asset service providers (VASPs) such as crypto exchanges.
The bank also calls for increased market surveillance and cooperation with law enforcement authorities.
This proactive approach is crucial to safeguard the integrity of the financial system.
The Bank of Botswana's actions align with a global movement towards establishing robust regulatory frameworks in response to the rapid growth of the crypto market.
The need for effective oversight is recognized as the integration of crypto markets into the traditional financial system can facilitate criminal activities.
The Bank of Botswana's emphasis on creating a robust regulatory framework reflects a broader understanding of the need to balance innovation with safeguarding financial stability.