Regulators in Kenya are taking first steps in determining the regulatory regime for the use of cryptocurrencies. The Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) are planning a meeting early next year to discuss the way forward regarding cryptocurrencies. The CMA states:
The… forum intends to meet in the first quarter of 2018 to review oversight of fintech solutions from a holistic perspective that covers all the five sub-sectors in the financial market -banking, insurance, capital markets, pensions and Saccos [Savings and Credit Cooperative Organizations]
Cryptocurrencies and distributed ledger technology will be reviewed under banking. It seems the regulators are, as usual, playing a catch up game. CBK has in the past warned Kenyans against using cryptocurrencies hoping to stem the wave. The leading CSP in Kenya, Safaricom, had to toe the line and stated that in the absence of approval from CBK, Safaricom would not permit bitcoin-related transactions on its M-Pesa system. In December 2015, CBK had warned:
…virtual currencies such as Bitcoin are not legal tender in Kenya and therefore no protection exists in the event that the platform that exchanges or holds the virtual currency fails or goes out of business
Clearly, Kenyans decided not to heed that warning and activity on this front has seen Kenya become one of the main Bitcoin economies in Africa; the others are South Africa, Nigeria and Ghana. A Nairobi-based startup, aptly named BitPesa has raised USD 1.7Mn to fund its business activities. These include: brokerage services, buying and selling Bitcoin on behalf of customers, and a remittance service. BitPesa operates in Kenya and Ghana.
This all goes to show that innovation is no respecter of warnings that are delivered on the morning newspaper. If there are risks to be managed (and any new technology will have plenty of these), they will not be managed by scaring people away. It is laudable that the regulators have acknowledged this and are planning to do something, finally. As to what exactly they will do, only time will tell.