Namibia: The Virtual Assets Act 10 of 2023 – What should you know?

The Virtual Assets Act 10 of 2023 (VAA) was brought into force on 25 July 2023. With the promulgation and coming into force of the VAA, many had the hope that the Act would shed some light on questions such as:

  • Am I legally allowed to own, possess or trade my Bitcoin?
  • What are the rules for trading Bitcoin?
  • How is crypto currency regulated in Namibia?
  • What does the term ‘virtual assets’ actually even mean?

The VAA, to some extent, provides answers to the above, but it does not yet regulate all that we want to know. This article shares a short summary of the VAA and what you do need to know. (Note: There is a
table at the end of this article setting out some additional definitions provided for in the VAA.)

The VAA

The preamble of the VAA states that it was enacted to provide for the licensing and regulation of virtual asset service providers as well as to designate a Regulatory Authority to regulate and supervise virtual asset service providers and related activities in order to ensure consumer protection, prevention of market abuse and prevention or mitigation of the risk of money laundering, financing of terrorism and proliferation activities posed by virtual assets markets.

Section 2 further holds that the VAA applies to persons that, by way of business, provide virtual asset services (as set out in Part 1 of Schedule 2) for or on behalf of another person. Accordingly, the VAA was enacted not so much for the customer or client, but rather to regulate the virtual asset service providers and the market in which trading of virtual assets occur.

Consequently, most provisions of the VAA are designated to the licensing of virtual asset service providers, which provisions include amongst other things, the conduct of business, professional conduct, responsibilities of licence holders and the financial obligations of licence holders.

The virtual asset services mentioned above include the following: initial token offering; exchanging one virtual asset for another virtual asset; exchanging virtual assets for fiat currencies or fiat currencies for virtual assets; transfer of virtual assets; operating a virtual asset exchange; safekeeping of virtual assets or instruments enabling control over virtual assets; administration of virtual assets or instruments enabling control over virtual assets; as well as participation in and provision of financial services related to a token issuer’s offer and sale of virtual assets or the token issuers offer or sale of virtual assets.

The VAA, furthermore, defines ‘virtual assets’ as a digital representation of value that can be digitally transferred, stored or traded; that uses a distribution ledger technology or similar technology; and that can be used for payment or investment purposes.

This explains the term; however, it does not quite answer the question of which virtual assets or virtual currencies (e.g. Bitcoin, Ethereum, Litecoin etc.) exactly fall under this term. It must be noted that section 3 of the VAA makes provision for the Minister, after consultation with the Regulatory Authority, to declare by notice in the Government Gazette digital representations of value to be virtual assets for the purpose of the VAA. However, no such notice has been published yet and, accordingly, it is not yet known which virtual assets the VAA refers or applies to.

The VAA does, however, regulate the process in terms of which virtual assets are transferred from one virtual asset address or account to another virtual asset address or account. It, therefore, regulates the process whereby a virtual asset is transferred from the originator/ client, who places an order for the transfer of virtual assets with an originating virtual asset service provider, to the beneficiary virtual asset service provider, who receives the virtual asset on behalf of the beneficiary/ other client who will now own the virtual asset on completion of the transfer.

The Bank of Namibia as Regulatory Authority has, accordingly, issued various sets of rules in order to facilitate the transfer of virtual assets. These rules relate to, amongst other things, the transfer of virtual assets, cross border wire transfers, advertising of virtual assets, risk management and cyber security related matters.

In addition, and in order to promote the purposes of the VAA as set out in the preamble, stringent requirements are placed on virtual asset service providers. As a point of departure, section 4, requires that virtual asset service providers, officers, beneficial owners (of applicants of licences), associates and other persons to whom the VAA applies must be ‘fit and proper’ and the Regulatory Authority is not allowed to grant an application for a licence unless it is satisfied that such applicant and its related parties are fit and proper persons.

The Bank of Namibia has, additionally, issued Guidelines in terms of section 4(2) of the VAA called the ‘Fit and Proper Person Guidelines’. Guideline 4 explains that the purpose of the fit and proper test is to:

  • establish a standard benchmark for licensing and for ongoing regulation and supervision of licence holders and applicants for authorisation under the VAA;
  • act as a deterrent to protect the interests of consumers of financial services;
  • encourage high standards of market conduct;
  • encourage a high level of confidence amongst those using, and those considering using Namibia as a base for their operations;
  • deter making an abuse of the Namibian market;
  • promote a business environment that meets acceptable international standards; and
  • ensure that persons, who are not fit and proper to perform functions in relation to a regulated activity, are precluded from doing so, in the public interest.

Guideline 7, therefore, requires that qualities such as honestly, integrity, diligence, fairness, reputation and good character must be demonstrated by the persons to whom the VAA applies on an ongoing basis.

Conclusion

In the current day and age, we find ourselves immersed in a world that has not only become mostly digital, but a world in which digitisation occurs at an unmatched pace. This has undoubtedly caused the need for our Legislature to act and react to the increasing demands of the digitised world.

The VAA is only one example of our Legislature’s response to the ever-changing circumstances we find ourselves in. Accordingly, the VAA might not yet answer all our questions, but it is a promising start to regulate the virtual asset world and to ensure that the virtual asset market in Namibia is not abused or used for improper purposes, but is rather used as one where virtual assets can be traded honestly and fairly.

Definitions provided for in section 1 of the VAA:

‘beneficiary’ Means, in relation to the transfer of virtual assets, the person that will own the virtual asset on completion of a transfer.
‘beneficiary virtual asset service provider’ Means the virtual asset service provider that will receive the virtual asset on behalf of a client from the originating virtual asset service provider.
‘client’ or ‘customer’ Means a person with whom the virtual asset service provider establishes or intends to establish business relations or for whom the virtual asset service provider undertakes or intends to undertake a transaction.
‘distributed ledger technology’ Means a digital ledger in which data is recorded, consensually shared and synchronized across a network of multiple nodes or sites accessible by multiple persons; and includes a distributed ledger technology platform or software program that operates on a blockchain or similar technology.
‘distributed ledger technology platform’ Means an online mechanism for the sale, trade or exchange of virtual assets offered by a licence holder to its customers.
‘fiat currency’ Means a banknote or coin that is in circulation as a medium of exchange in Namibia, including a digital currency issued by the Bank of Namibia.
‘initial token offering’ Means to offer to the public for sale a virtual token in exchange for fiat currency or another virtual asset.
‘licence holder’ Means a virtual asset service provider to whom a licence is issued in terms of section 9.
‘Minister’ Means the Minister responsible for finance, which in this case is the Minister of Finance and Public Enterprises.
‘originator’ In relation to a transfer of a virtual asset, means the person that places an order with a licence holder for the transfer of virtual assets or where the transfer is carried out by a licence holder on behalf of a client or other third party, the client or third party who owned the virtual asset immediately before the transfer.
‘originating virtual asset service provider’ Means the virtual asset service provider that, on behalf of a client, transfers a virtual asset to the beneficiary virtual asset service provider.
‘Regulatory Authority’ Means an entity designated by the Minister as a Regulatory Authority in terms of section 5. The Minister, in Government Gazette 8148 (GN 218/2023) designated the Bank of Namibia as the Regulatory Authority.
‘supervisory authority’ Means the Financial Intelligence Centre.
‘transfer of virtual asset’ Means the transfer of a virtual asset from one virtual asset address or account to another virtual asset address or account.
‘virtual asset’ Means a digital representation of value that can be digitally transferred, stored or traded; that uses a distribution ledger technology or similar technology; and that can be used for payment or investment purposes, but does not include digital representations of fiat currencies, and securities or other financial assets regulated under the securities or financial assets law of Namibia.
‘virtual asset exchange’ Means a trading platform in the distributed ledger technology for the sale, trade, transfer or exchange of a virtual asset for fiat currency or virtual asset.
‘virtual asset service provider’ Means a person that by way of business provides virtual asset services for or on behalf of another person.
‘virtual token’ Means any cryptographically secured digital representation of one or more rights provided on a digital distribution ledger platform or similar platform and issued or to be issued by a token issuer.

 

Namibia: Defining defamation

From tweets made on X (formerly Twitter) to statements made in the media, the term defamation can easily be resorted to when posts and publications made on these platforms threaten one’s reputation.

The Constitution of the Republic of Namibia preserves the right to freedom of expression under Article 21. However, to what extent should this be permitted and what does defamation really encompass in the Namibian legal climate?

This article outlines the legal principles of defamation in Namibia and the various approaches adopted by the Namibian courts.

Definition

The law of defamation forms part of the law of delict and can be defined as follows: ‘The intentional infringement of another’s right to his good name. To elaborate, defamation is the wrongful, intentional publication of words or behavior concerning another which has the tendency to undermine his status, good name or reputation.’

Defamation can also be defined as: ‘defamatory statement is one which injures the person to whom it refers by lowering him in the estimation of the ordinary intelligent or right thinking members of society’.

Grounds

Based on the common law, to succeed in proving that defamation has been suffered by a party, four elements need to be present namely; publication, wrongfulness, intention and the defamatory word or conduct about the party.

Should a party succeed in proving that a person published a defamatory statement about him or her, the courts will infer that the publication is wrongful and that there was an intention to injure.

Establishing the element of publication will be satisfied once the defamatory statement is made know to at least one other person, including it being made on various platforms or forms including newgroups, bulletin boards and speech.

Test

The test for defamation is whether, in the opinion of a reasonable person with ordinary intelligence, the words have the tendency to undermine, subvert, or impair a person’s good name, reputation or esteem in the community.

A two staged enquiry is adopted in this regard. The first is to establish the natural or ordinary meaning of the statement by employing an objective test of the reasonable observer. The second is whether the statement is defamatory, based on the statement’s natural or ordinary meaning, would it tend to lower or injure a party’s good esteem in which the party is held by the reasonable or average person to whom it had been published.

Defences

Defamatory statements are permitted by way of three fundamental defences. Firstly, whether it can be proved, on a balance of probabilities that the statement is true and in the public interest. Secondly, whether the statement amounts to fair comment or freedom of expression. Lastly, whether the statement is made under privileged circumstances, meaning that under circumstances where the party who made the statement believed that it was their moral or legal duty to make a certain statement, they will be protected.

This list of defences is, however, not exhaustive and if any of these elements can be proven then the defamation claim will fail.

Recent defamation decisions 

Trustco Group International Ltd and Others v Shikongo

In the Supreme Court matter of Trustco Group International Ltd and Others v Shikongo, the appellants who were the proprietors/ owners of the Informante newspaper appealed against the judgment made in the High Court, in terms whereof the mayor of Windhoek was awarded damages in the amount of NAD 175 000.

In the High Court, the former Mayor of Windhoek sued the appellants for a publication made in the Informante newspaper on 21 September 2006, which article alleged that the former Mayor was connected to a ‘boerdery cartel’, involved in irregular land deals and that the mayor was responsible for causing the City of Windhoek to lose money.

The Supreme Court had to consider the following: how the law of defamation should give effect to both the right to freedom of speech under Article 21(1) of the Namibian Constitution and the constitutional precept of dignity; and whether the media may avoid liability for defamation by showing that the defamatory statement was not made with the intention to injure.

The Court importantly followed the principle that the media will be liable for the publication of defamatory statements unless they can establish that they were not negligent and that as an elementary principle of fairness, an individual should be provided with an opportunity to respond to the article about them.

The Court found that the statements made about the former mayor were not reasonable, and did not constitute reasonable journalism. The decision of the High Court was upheld in part, in respect of the finding that the statements made about the mayor were defamatory. The Court overturned the quantum of damages of NAD 175 000 to NAD 100 000 as it was of the considered view that the award made by the High Court was considerably high in the circumstances.

Geingos v Hishoono

In this matter, slanderous averments were made against the First Lady of the Republic of Namibia, Mrs Monica Geingos, on social media.

Here, the Court importantly considered the constitutional right of dignity to assess whether the statements were defamatory and noted the following: ‘Reputation and dignity are two distinct concepts. Reputation, as stated before, constitutes the perception and good name of a person in the eyes of the community. Dignity which is inviolable, as per the Constitution, is a given. Everyone has it for inherently being human and cannot be taken away. The right to life, would mean less, without respect for human dignity. That is the magnitude of dignity. Respect for reputation and dignity of others is a requirement of law with consequences for defaulters.’

The Court consequently found that the statements made about the First Lady were barbaric and defamatory and awarded damages in the amount of NAD 250 000.

Angula v Tjirdonda

In this matter, we successfully represented a legal practitioner (Plaintiff) against Mr Tommy Tjaronda (Defendant) for statements made about the Plaintiff on X. Particularly, that the Plaintiff is a ‘liar’ and a ‘lying practicing attorney’.

The Defendant relied on the defence of truth and that the statements were made in the public interest. The court importantly noted the following: ‘In my view, it is clear, on the evidence adduced that the statements tweeted by the defendant were totally false and untrue. Assessed within the context in which they were made, the statements were made with actual malice and total indifference to the plaintiff’s right to dignity and reputation. The defence of ‘public interest’ applies only if the impugned statements are factually true.’

After considering the facts of the matter, the Court found that the statements made about the Plaintiff were false, awarded the Plaintiff damages in the amount of NAD 100 000, and ordered the Defendant to publish a retraction and an apology.

Conclusion

A rising popularity of defamation cases exists in Namibia, and our courts have developed the law of defamation by following a strict two-staged enquiry in order to establish the elements of defamation, as well as considering defamation against the backdrop of the rights enshrined in the Namibian Constitution. Our courts have shown a reluctance to tolerate defamatory remarks, whether these remarks are made through the media or on social media platforms.