Despite Kenyan authorities warning against trading in cryptocurrencies, the people of Kenya are embracing the technology and are still trading. Authorities are saying that cryptocurrencies have no regulatory control and investors would have no recourse should they suffer financial losses.
The Blockchain Affiliation of Kenya (BAK) believes that in contempt of these warnings, Kenyans are continuing to use Bitcoin and other cryptocurrencies. The non-profit group believes that crypto can cut back transaction fees and increase native remittances.
The Kenyan Capital Markets Authority (CMA) and the Central Bank of Kenya have both warned investors to steer clear. They are particularly worried about ICOs and the risks of fraud. Last year, the CMA said: “It is notified for general information that the CMA has not as of this date, approved any Initial Coin offering. The ongoing offerings are unregulated and speculative investments with considerable risk to the investor. Some of the risks are identified by the International Organisation of Securities Commission, of which Kenya is a member”.
However, these warnings are not holding the Kenyans back, particularly small business owners and entrepreneurs. Tony Mwongera, the chief executive of Healthland Spa in Nairobi, started accepting Bitcoin last year. He told the BBC: “I decided to adopt the use of cryptocurrencies because there was so much theft in my business, so I said, let me use a way that can be safe, secure and I can also embrace technology.” His customers have said that they find using crypto convenient.
Bitcoin Servicing The Millions Of Unbanked
Banks are forbidden to open accounts for people who are known to be dealing in cryptocurrencies, meaning it can be difficult for people to convert their crypto into fiat. But Paxful, a peer-to-peer Bitcoin marketplace has seen an upswing in activity driven by African consumers because they are servicing the millions who are underbanked. Africa conducted more than 6.5 million trades last year.
Artur Schaback, Paxful Co-founder and COO said: “We remain passionate about facilitating financial inclusion to the underbanked and are awed by the progress made this year in achieving this goal. With only a small percentage of the global internet-active population currently trading in the crypto-space, the potential for expansion is great. The encouraging number of new users gained in 2018 in Africa alone proves the appetite for this technology. We’ve only just begun making inroads and are excited about the future.”
But now cryptocurrency developers have been blocked from attending the CMA fintech regulatory sandbox, which will be attended by more than 70 companies. It is there that they will issue the final policy guidance note to anchor the regulations in law.
“Blockchain firms will be considered so long as they are not dealing with cryptocurrencies since the CMA’s mandate does not extend to cryptocurrency,” said CMA Chief executive Officer Paul Muthaura. “The CMA regulatory sandbox can only serve financial innovations that are directly within the regulatory perimeter of the CMA”.