East Africa:Regulators now mull adopting virtual currencies like Bitcoins

27 October 2017

Money Transfer

To adopt or not to adopt virtual currencies like Bitcoins? This appears to be the biggest question in the minds of Kenyan financial regulators at the moment.

As a result, the regulators including the Central Bank of Kenya and the Capital Markets Authority are planning a meeting early next year to discuss the way forward regarding cryptocurrencies.

This follows increasing interest among Kenyans trading on the virtual currencies that operate independent of a central bank.

The developments comes two years after the CBK reiterated that Bitcoins and similar products are not legal tenders nor are they regulated in Kenya hence warning the public to desist from transacting in them.

“The joint financial specter regulators forum intends to meet in the first quarter of 2018 to review oversight of fintech solutions from a holistic perspective that cover all the five subsectors in the financial market -banking, insurance, capital markets, pensions and Saccos,” regulatory policy and strategy director at the Capital Markets Authority Luke Ombara told the Star.

He added that under banking, they will review the cryptocurrencies and distributed ledger technology.

The review will involve measures on how to come up with a policy guide to control the currencies.

The regulators include Capital Markets Authority, Central Bank of Kenya, Insurance Regulatory Authority, Saccos Societies Regulatory Authority and the Retirement Benefit Authority.

Once made, the policy guidance note will help capture the fintech market and provide oversight of the industry.

Currently, the CMA is only focusing on fintechs specializing in the capital markets

This follows a partnership signed between them and Abu Dhabi Global Market in August this year that provides a framework for information sharing between the two authorities to assist each other in keeping abreast of regulatory and relevant economic or commercial developments in the respective markets.

The authority has also sought consultations from the firm as it maps potential capital market fintechs in the country and laying down a regulatory framework for them.

While that is underway, recent reports indicate that Kenya is among the four main Bitcoin economies in Africa. Other countries include South Africa, Nigeria, and Ghana.

This growth is largely attributed to the increase in Bitcoin start-ups, clubs and a population used to making mobile payment transactions.

However, despite the fast penetration of the cryptocurrencies knowledge, the CBK has maintained that members of the public must not engage in any virtual currency transactions.

“This is to inform the public that 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,” CBK warned in the December 2015 public notice.

Source: The Star