The central bank of Botswana warns of "minimal" cryptocurrency hazards but calls for regulation.

According to Botswana's central bank, there are "minimal" dangers to financial stability because the local cryptocurrency markets there are still in their infancy. Nonetheless, the bank stated that rules have to be implemented to avoid future dangers to digital assets.

The central bank stated in its Financial Stability Report that there may be systemic concerns due to the growing interdependence of the cryptocurrency market with the rest of the financial system.

A cascade failure brought on by connections within the financial system is referred to as a "systemic risk" in the domain of finance. An economic downturn could be the outcome of the ensuing cascade of events.

The financial stability of Botswana is not under risk from cryptocurrency.

Nevertheless, the bank claimed that the risks posed by cryptocurrencies to its home markets were negligible. Nonetheless, the central bank stated that in order to prepare for potential hazards, regulators ought to create monitoring structures for the industry. According to the Bank of Botswana:

"On a domestic level, there aren't many hazards associated with cryptocurrency assets, but persistent wrongdoing in the market raises regulatory issues. Therefore, regulators must provide efficient structures for sector oversight.

Additionally, the bank stated that local markets for virtual assets are still in their infancy. The bank said that because it is "relatively unsophisticated," the dangers to financial stability are minimal.

Additionally, the central bank stated that there aren't many hazards associated with financial technology in general. But when technological advancements permeate the local markets.

Money laundering is ranked as a major security risk in Botswana.

The Bank of Botswana identified the use of digital payment instruments for money laundering and terrorist funding as one of the top five national security threats originating from the financial sector, despite the fact that cryptocurrency does not pose a danger to financial stability. The central bank wrote:

"Money laundering in the financial sector is made possible by the development of digital platforms and digital payment instruments that encourage transaction anonymity."

According to the bank, the intricacy of financial technology advancements makes it possible for illegal funds to be transferred internationally with little chance of detection.

The central bank asked regulators to make sure that virtual asset service providers, such as cryptocurrency exchanges, adhere to anti-money laundering, counter-financing of terrorism, and counter legislation in order to reduce these risks.

Additionally, the bank stated that regular cooperation with law enforcement and market surveillance could aid in the detection of illicit activities.

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