For those of you who do not know what cryptocurrency is, it is a form of online payment that works in a similar way as stocks? You can buy, sell, and trade cryptocurrency to earn profits on it through cryptocurrency exchanges or auto-trading platforms. Moreover, you can exchange it for cash, goods and services over the internet.
How Does Cryptocurrency Work?
There is a technology named blockchain which is used to build cryptocurrencies as it records the information in a way that makes it impossible to change or hack.
Just like most of the companies use their system and introduce their currency to exchange for goods in the respective company like in bitcoin company that provides you the use of cryptocurrency, some companies mostly in the US have adapted to use blockchain and use cryptocurrency.
Governmental Behavior in Africa towards Cryptocurrency
Kenya is a leading Hub in Financial Technologies in Sub-Saharan Africa and stands amongst giants like Africa and Nigeria. Kenya has been working on innovative products for the enhancement of financial inclusion globally, with the greatest of all being M-paisa just like bitcoin prime that allows you crypto assets, which is a mobile-phone-based money transfer and remains one of the most innovative products globally.
However, in the case of cryptocurrency, the future doesn’t seem very bright as the market excitement and interest in the cryptocurrency have shifted to a major degree on regulatory risk, given the borderless nature of transactions.
Frequently Asked Questions
- Are cryptocurrencies treated as legal tender in Kenya?
- Are cryptocurrencies considered assets under the law in Kenya?
- Are cryptocurrencies licensed in Kenya?
The answer to all these questions is NO. As innovative as it may sound there are many risks to cryptocurrency, and the government is not accepting the nature of this asset in business transactions. Hence, cryptocurrencies are not welcomed by major parts of Africa as legal tender.
Statement of the Governor
The government of Kenya is not willing to accept nor prohibit the use of cryptocurrency keeping it neutral in both cases. In December 2015, the Governor of Kenya, from the CBK (Central Bank of Kenya), stated to the public as
“This is to inform the public that virtual currencies such as Bitcoin are not legal tender in Kenya and therefore no protection exists if the platform that exchanges or holds the virtual currency fails or goes out of business. The public should therefore desist from the transaction in Bitcoin and similar products.”
This statement clearly defined that the Central Bank of Kenya (CBK) does not regulate virtual currencies and offers no comfort to members of the public.
Capital Market Authority Notice
On 21 February 2018, the Capital Market Authority issued a cautionary notice, which was based on warning the investors against being a part of Initial Coin Offerings (ICOs). This notice indicated that CMA has not approved any ICOs and that the investments were considered as risk exposure for the investor. Moreover, the CMA has not yet designated cryptocurrencies as securities.
Conclusion
The government of Kenya has no interest in the regulation of cryptocurrency because of its anonymous nature. There are various reasons against the regulation of cryptocurrency assets including
- Pose a significant risk due to their nature to the whole world.
- Its decentralized nature makes it difficult for any Government to claim territory. Jurisdiction to regulate the economy of crypto.
- These assets pose a major risk to the stability of the global financial superstructure.
However, the government does not even prohibit the use of cryptocurrency, it is the leading African country among 10 globally in cryptocurrency holding and blockchain transactions. Kenya’s bitcoin holding represented 2 percent of the Country’s GDP.
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