In the dynamic realm of virtual assets, financial transparency and responsibility are paramount. Namibia’s Virtual Assets Act 10 of 2023 addresses these concerns by outlining specific financial obligations for license holders, ensuring the stability and credibility of the virtual asset services sector.
Setting Financial Standards:
Minimum Unimpaired Capital and Financial Requirements:
Section 19 grants authority to the Regulatory Authority to specify, through Gazette notices, the license holders subject to maintaining minimum unimpaired capital and other financial requirements. This empowers the Regulatory Authority to adapt regulations to evolving industry dynamics.
Segregation of Accounts:
Maintaining Separate Accounts:
License holders dealing with virtual assets of clients are mandated by Section 20 to keep accounts related to virtual asset services separate from any other accounts. This separation enhances transparency and accountability.
Financial Reporting and Auditing:
Audited Financial Statements:
For each financial year, as defined in Section 21(1), license holders are required to file audited financial statements with the Regulatory Authority within four months after the year-end. These statements must cover all transactions and balances related to virtual asset services.
Approval and Standards:
The audited financial statement, as per Section 21(4), must adhere to accounting standards approved by the Regulatory Authority. The audit itself should comply with International Standards on Auditing or other standards endorsed by the Regulatory Authority.
Filing Period Extension:
License holders can apply for an extension of the filing period, subject to approval by the Regulatory Authority based on justifiable reasons.
Retention and Accessibility:
License holders must retain copies of the most recent audited financial statements and auditor’s reports for five years from the filing date. This information must be readily accessible for regulatory scrutiny.
Legal Consequences for Non-Compliance:
Enforcement Measures:
Non-compliance with the filing and auditing requirements outlined in Section 21(2) or (4) is deemed an offense. A license holder in violation may face fines up to N$10,000,000, imprisonment for up to 10 years, or both, as stipulated in Section 21(6).
Conclusion: Fostering Financial Integrity in Virtual Asset Services
Namibia’s Virtual Assets Act 10 of 2023 establishes a comprehensive framework to ensure financial integrity within the virtual asset services sector. By delineating minimum capital requirements, enforcing the segregation of accounts, and imposing rigorous financial reporting and auditing standards, the Act strives to foster a robust and trustworthy virtual asset ecosystem in Namibia.
