The Kenyan Parliament has given Treasury Secretary Henry Rotich two weeks to decide whether cryptocurrencies will become legal tender in the country. The Finance and National Planning Committee took Mr. Rotich to task to explain why trade in bitcoins and other virtual currencies was taking place in the country without any proper licensing or taxation norms.
Crypto business still active after ban and warnings
In December 2015, the Central Bank of Kenya (CBK) issued a notice, warning the public against using virtual currencies. Even after that, the CBK has issued several warnings to the public and local banks not to deal with cryptocurrencies as they are not issued by a state authority or central government. To quote Joseph Limo, who chairs the committee,
“ We are surprised to hear that even the CBK is not aware that there is a lounge at Kenyatta University, an ATM in town, and a hotel in Nyeri which trade in bitcoins. There is a bigger problem in Kenya since people are trading billions in virtual space yet the Treasury has not licensed and taxed it like trade in M-Pesa and bank transactions,”
Mr. Rotich told MPs that like any other developing technology, the government was yet to determine whether or not trade in cryptocurrencies will be allowed to thrive. He said discussions were ongoing globally to regulate the trade in virtual currency to minimize risks including money laundering.
During the session, Rotich dismissed digital currencies terming them as unstable. He used bitcoin’s price drop between 2017 and 2018 to explain the instability of cryptocurrencies.
He also said that
“I am not aware of people operating locally. But I will endeavor to find out whether we have local exchangers. The issue of cryptocurrencies is evolving and we can take a position as a country. This is a delicate balance between supporting innovation and killing it,” Mr. Rotich said.”
Central Bank of Kenya (CBK) stance on cryptocurrencies
The stance of CBK is no different from many of the leading countries of the world- which is it fears the cryptocurrencies are a haven to Ponzi schemes as they are not issued or are under the control of the government. The Central government through its Governor, Patrick Njoroge has been making attempts towards slowing down the propagation of Bitcoin and cryptocurrencies. Njoroge in April had sent a circular to all banks warning them of the dangers of dealing in virtual currencies. According to him while addressing the National Assembly Committee on Finance at Parliament Buildings, the circular cautioned the banks against dealing in virtual currencies or transacting with entities that are engaged in virtual currencies.
The fate of cryptocurrencies in Kenya now seems to be sealed as the warning to Mr. Rotich is quite stern. Another country where cryptocurrency is seeing a dead-end under regulatory pressure.
Will CBK ever change its stance and consider cryptos in the future? Do let us know your views on the same?
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Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.