Namibia’s Virtual Assets Act of 2023 brings clarity to the realm of virtual asset services while meticulously outlining what falls outside its regulatory purview. Understanding the exclusions is crucial for participants in the digital financial landscape.
Let’s delve into the specific services and activities that the legislation explicitly excludes from the ambit of virtual asset services.
Closed-Loop Items
Non-transferable, Non-exchangeable, and Limited Use: Closed-loop items, characterized by their non-transferable and non-exchangeable nature, find themselves outside the regulatory scope. These items, which lack versatility for payment or investment purposes, are confined within closed-loop systems. Importantly, they cannot be sold onward on secondary markets, distinguishing them from other virtual assets.
Professional Procurement of Financial Services
Acting on Behalf of Financial Service Providers: Individuals or entities operating in a professional capacity on behalf of those engaged in financial services, specifically related to the organization, promotion, issuance, sale, or trade of virtual assets, are excluded. This provision ensures a clear distinction between those directly involved in virtual asset services and those providing ancillary support.
Ancillary Services and Products
Supporting the Virtual Asset Service Provider: Certain ancillary services and products, while supportive of virtual asset service providers, are not considered virtual asset services themselves. These include:
- Logistics and Technical Assistance Services: Supporting the operational infrastructure of virtual asset service providers.
- Manufacture of Hardware and Engineering of Software Services: Involving the creation and enhancement of technological components.
- Network and Telecommunication Services: Facilitating communication within the virtual asset ecosystem.
- Information Technology Services for Virtual Assets: Covering aspects like creation, encryption, and digital transfer of virtual assets.
- Services to Hardware Wallet Manufacturers or Non-custodial Wallets: Supporting entities involved in hardware or non-custodial wallet solutions.
- Validation, Nodes Operation, and Virtual Mining Services: Activities related to the technical validation and operation of nodes and virtual mining.
Summary
Namibia’s delineation of excluded services and activities provides a nuanced understanding of the regulatory landscape. By explicitly stating what does not fall under virtual asset services, the legislation ensures that support functions, closed-loop items, and certain professional capacities remain outside the primary scope.
This strategic approach aims to strike a balance between fostering innovation and safeguarding the integrity of the virtual financial ecosystem. As Namibia embraces the digital evolution, these exclusions contribute to a robust and well-defined regulatory framework.
