The Central Bank of Kenya (CBK) has issued a public notice titled, “Caution to the Public on Virtual Currencies Such as Bitcoin”.
In it, the Bank emphasizes that bitcoin is unregulated and “not issued or guaranteed by any government or central bank.” Therefore:
“No protection exists in the event that the platform that exchanges or holds the virtual currency fails or goes out of business.”
It goes on to highlight several risks posed by virtual currency, including its anonymity, lack of traceability, use by criminals and its trade on unregulated exchanges. There is also no “underlying or backing of assets” and its value is speculative in nature. Therefore, it is also subject to high volatility.
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The notice does not prohibit Bitcoin but does discourage the public from using it, concluding:
“The public should therefore desist from transacting in Bitcoin and similar products.”
For the most part, Kenya’s notice is fairly similar content-wise to most other warnings made by governments about virtual currency over the years. However, the vast majority of warnings stopped short of explicitly discouraging its use.
Kenya is home to a number of digital currency initiatives, such as BitPesa. The country is a hotspot for the development of alternative payments systems for unbanked populations, particularly mobile-based banking.