Current State of Crypto Adoption in Botswana
Source: Freepik
Botswana might not be the first name that comes to mind when you think of global crypto adoption, but times are changing now. As more countries adopt cryptocurrencies as an alternative to traditional money, the people in Botswana are quietly finding their place in this space.
What makes this trend interesting, is that, despite the growing interest in the crypto space, there are no comprehensive regulations in place.
Still, despite its small population, Botswana has become one of the most active users of cryptocurrency. However, while some African countries have banned crypto, the country has taken a "trade at your own risk" approach since there's no law regulating it. In 2021, the Bank of Botswana (BOB) announced that it doesn’t support cryptocurrency trading.
“The Bank of Botswana does not regulate cryptocracies and/or related distributed ledger technologies and is thus not undertaking any studies in that direction.”
Andrew Sesinyi, Head of Communications at the Bank of Botswana (BOB)
The BOB also noted that cryptocurrencies like Bitcoin aren’t protected by any regulations. This has made it difficult for crypto exchanges to set up in Botswana, as banks won’t support transactions between crypto platforms and the public. So, people who want to buy or trade Bitcoin often have to rely on informal methods like peer-to-peer (P2P) trading.
Despite the challenges, Botswana has an active Bitcoin community. Traders use apps like Altcoin Trader, which is based in South Africa, to buy and sell. Also, some startups like Express Minds Ltd introduced Bitcoin ATM in Botswana, which could provide a more accessible option for those looking to transact with Bitcoin.
Since there are no local exchanges to trade Botswana's currency (Pula) for Bitcoin, many use WhatsApp groups or social media.
Governor of the BOB, Moses Pelaelo informed the public that cryptocurrencies are neither controlled nor regulated by the BOB and cannot be transferred into Botswanan Pula. He noted that it poses a threat to the efficacy of central bank mandates.
…it is impossible to transfer Pula into Bitcoin…
However, these methods are unregulated and risky. However, the recent installation of a Bitcoin ATM in Gaborone serves as a positive step forward. Some critics have raised concerns about the 15% commission charged on Bitcoin sales at the ATM.
Many however view it as a small price to pay compared to the hassle of traveling to South Africa or relying on family and friends abroad for crypto purchases.
However, in 2022, Botswana made an interesting move by introducing new regulations through the Virtual Assets Act. According to Section 3(b), this Act applies to anyone involved in virtual asset businesses, regardless of their location.
This means that if your company offers cryptocurrency services or deals with digital tokens, you’ll need to obtain a license from the Non-Bank Financial Institutions Regulatory Authority.
Notwithstanding, as blockchain startups continue to emerge, the BOB may be forced to rethink its stance as there are still no clear regulations for traders. With this, the government would be inclined to create clearer rules for the growing crypto market.
Factors Driving Crypto Adoption in Botswana
Several factors are pushing more people in Botswana to adopt cryptocurrency. These factors include:
Lack of Access to Traditional Banking
Many people in Botswana, especially in rural areas, don’t have easy access to banks. Cryptocurrency offers an alternative way to send and receive money without needing a traditional bank account. It’s convenient and available to anyone with a smartphone and internet connection.
Peer-to-Peer (P2P) Platforms
Since Botswana lacks local cryptocurrency exchanges, people have turned to peer-to-peer (P2P) trading. Platforms like WhatsApp and social media are being used to trade Bitcoin and other cryptos. Though risky due to a lack of regulation, these informal networks have made crypto more accessible to everyday people.
Blockchain Startups
The rise of blockchain startups like Satoshicenter is also driving crypto adoption in Botswana. These startups are showing how blockchain technology can improve sectors like finance, supply chain, and education.
As these businesses grow, they are creating more awareness and opportunities for people to use cryptocurrency in Botswana
High Transaction Fees for Cross-Border Payments
Sending money across borders can be expensive, with banks and remittance services charging high fees. Cryptocurrencies, like Bitcoin, make it cheaper to transfer money internationally.
This is particularly appealing to those who often send or receive funds from family abroad.
Political Instability
Political instability can create uncertainty in a country. When people worry about the future of their currency or the economy, they may turn to cryptocurrencies as a safer option.
Crypto offers a way for people in Botswana to store wealth without relying on local banks, which might be seen as unstable.
Challenges to Crypto Adoption in Botswana
Source: Freepik
Trading crypto in Botswana doesn’t come without its own challenges. These challenges include:
Lack of Regulation
The absence of a clear regulatory framework makes many people hesitant to adopt cryptocurrencies. Without guidelines and protections, users worry about the risks involved, such as fraud and scams.
Risks of Peer-to-Peer (P2P) Platforms
Another challenge to crypto adoption in Botswana is the risk that comes with using P2P platforms to trade cryptocurrencies. There’s no guarantee that transactions will be safe, and users may fall victim to scams or fraudulent sellers.
Users can face scams, hacking, or dishonest sellers, making these platforms a less secure option for trading. Consequently, these factors discourage most people from trading crypto.
Banking Restrictions
Since banks in Botswana do not support cryptocurrency transactions, it becomes challenging for individuals to convert their crypto into local currency or use it for everyday transactions.
This restriction can discourage people from adopting crypto as a viable financial tool.
“Different changes were also made and many times accounts were blocked due to unexplained reasons which made it inconvenient to buy from Coinmama,”
Limited Local Exchanges
There are no local cryptocurrency exchanges where people can easily trade Botswana’s currency (Pula) for crypto. This forces users to rely on international platforms, which may not be user-friendly or accessible to everyone.
Future Outlook and Recommendations
Source: Freepik
For crypto adoption in Botswana to increase, the country needs to look into the following:
Comprehensive Regulation
Botswana needs to establish clear regulations for cryptocurrency traders to foster crypto adoption.
This would provide legal protections for users and encourage more people to engage in the market without fear of scams.
Local Crypto Exchanges
Developing more local cryptocurrency exchanges would make it easier for Botswanans to trade their currency (Pula) for digital assets. This could reduce reliance on international platforms and improve user accessibility.
Promoting Security Awareness
As P2P trading becomes more popular, it’s crucial to promote security awareness among users. Providing resources on safe trading practices can help reduce the risks associated with scams and fraud.
Partnerships with Financial Institutions
Collaborating with banks and financial institutions can create a more supportive environment for cryptocurrency. This can lead to the development of products that integrate digital currencies into traditional finance.
Conclusion
Based on the above, it is evident that Botswana stands at a pivotal moment in its journey toward cryptocurrency adoption. While challenges like lack of comprehensive regulations and security risks exist, opportunities are available for crypto adoption in Botswana to grow.
The introduction of Bitcoin ATMs and a push for clearer regulations shows promise for the future. To fully capitalize on these opportunities, Botswana must address its current challenges.
With the right steps, it could position itself as a regional leader in the crypto space, driving innovation and setting an example for neighboring countries.
Frequently Asked Questions(FAQs)
Is cryptocurrency legal in Botswana?
Cryptocurrencies are not outright illegal. However, there are no clear regulations for their use. This creates a gray area where individuals and businesses are allowed to engage in cryptocurrency transactions, but they do so without much regulatory oversight or protection.
Can I trade cryptocurrencies through peer-to-peer (P2P) platforms in Botswana?
Yes, you can trade cryptocurrencies through peer-to-peer (P2P) platforms in Botswana. These platforms allow users to buy and sell cryptocurrencies directly with each other without going through a centralized exchange. However, using these platforms comes with several risks. These include potential fraud, lack of regulation, and the risk of dealing with untrustworthy buyers or sellers. Since cryptocurrencies are not formally regulated in Botswana, you won’t have legal protection if something goes wrong during a transaction.
Do Banks in Botswana support cryptocurrency transactions?
No, banks in Botswana do not support cryptocurrency transactions. This means you can’t directly exchange cryptocurrencies like Bitcoin for Botswana Pula at any bank in the country. Without banking support, people in Botswana rely on alternative methods like peer-to-peer (P2P) platforms or online exchanges to convert their cryptocurrencies into local currency.
Can people in Botswana buy Bitcoin with fiat currencies?
Yes, people in Botswana can buy Bitcoin using fiat currencies. They can do so through cryptocurrency exchanges like YellowCard and Coinmama, which allow users to purchase Bitcoin with local currency. These platforms often offer an accessible way for Botswanans to enter the cryptocurrency market, although buyers should be aware of associated risks, such as fluctuating exchange rates and platform security.
