Central Bank of Kenya: ‘The Public Should Desist from Transacting in Bitcoin’

Central Bank of Kenya: ‘The Public Should Desist from Transacting in Bitcoin’

The Central Bank of Kenya (CBK) has issued a warning to the public on the use and trading of virtual currencies such as Bitcoin. In a Gazette notice, the regulator has also declared that “no entity is currently licensed to offer money remittance services and products in Kenya using virtual currencies such as Bitcoin.”

Also read: Kenyan President Nominates BitPesa Board Member for Cabinet

Bitcoin is not legal tender in Kenya

The regulators notice fell short of declaring the use of virtual currencies illegal in the country only describing them as “not legal tender.”

An excerpt reads:

“”CBK reiterates that Bitcoin and similar products are not legal tender nor are they regulated in Kenya.The public should therefore desist from transacting in Bitcoin and similar products.””

This comes after a high court in Nairobi on December 14th, 2015 declined to issue interim orders to compel Safaricom to resume Mpesa services to customers buying or selling Bitcoins using Bitpesa, a Bitcoin exchange that has relied heavily on the mobile service to serve its customers.

DCF 1.0
Central Bank of Kenya

Whether this new development is in some way linked to the ongoing Bitpesa vs. Safaricom court case, is not clear yet. However, a blog post by Elizabeth Rossielo, the CEO Bitpesa, published on December 14th suggests the central bank would issue a statement.

“The Central Bank of Kenya may or may not make an official statement on digital currencies or Bitcoin during this case, because this case is not about the legality of Bitcoin in Kenya,” reads the blog post.

Bitcoin.com reached out to Bitpesa’s compliant officer Fred Fedynyshyn, to confirm whether the notice has anything to do with the case currently in court. However, Fedynyshyn replied that Bitpesa could not yet comment on the notice.

‘Desist from transacting in Bitcoin’

Some of the reasons the notice raises as the ground for the public to be wary about virtual currencies include that they are untraceable, anonymous, have no underlying value, and are volatile. “There is no underlying or backing of assets and the value of virtual currencies is speculative in nature,” asserts the notice, “This may result in high volatility in value of virtual currencies thus exposing users to potential losses.”

Bitpesa online interface
Bitpesa web interface

The reaction from the local Bitcoin community has been varied. “I am Happy they finally came out and made comments in public,” Michael Kimani, a Kenyan Bitcoin trader and enthusiast, told Bitcoin.com. “ Although I disagree with their press release on some points regarding untraceability, anonymity, regulation around the world and virtual currency platform risk.”

He further elaborated that this warning was not unique to Kenya. Kimani:

“Other central banks around the world have started this way, and then eased up. I see the same will happen here. Just a matter of time”

Will this help or hurt Bitcoin in Kenya? Share your thoughts and comment below!


Images courtesy of commons.wikimedia.org, pbase.com