How the Central Bank Of Kenya Plans To Regulate Bitcoin and Cryptocurrencies

Rather than fight change, the Central Bank of Kenya now seems to be reconsidering its stance on cryptocurrencies as a radically new way of high-speed, low-cost value transfer independent of traditional financial intermediaries.

Bitcoin and cryptocurrencies are a puzzle especially for regulators. Over the last 4 years our dear Central Bank Governor, Dr. Patrick Njoroge has consistently been opposed to the idea of cryptocurrencies. He issued 2 damning public notices warning the public to stay away and another circular expressly requesting banks to choke any value transfer activity related to cryptocurrencies.

As per the Central Bank of Kenya Act, he is well within his right. A bank is a regulated private business. You cannot compel a bank to take you as a customer or take your business. Thus, every once in a while, the governor pulls out his trump card to remind us who is boss.

But mounting pressure has pinned the old man against the wall, forcing him to revisit his dogmatism. An article from the Standard dated May 23rd titled “CBK Warms Up to Cryptocurrencies”  read

“CBK Governor Patrick Njoroge said the regulator was open to introducing cryptocurrencies such as bitcoin as alternative payment vehicles with the opportunity to reduce fraud.”

While in the past, all the the financial instruments that intermediary companies use for fund transfers were based on fiat currencies, in the forms of cash, bank deposits and electronic money – it is no longer the case with the advent of Bitcoin.

Rather than fight change, the Central Bank of Kenya now seems to be reconsidering its stance on cryptocurrencies as a radically new way of high-speed, low-cost value transfer independent of traditional financial intermediaries.

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5 Types of Pesa We Use in Kenya Today

Pesa is dynamic. We need look no further than Nairobi for 5 types of pesa in Kenya you’re likely to have come across.

Pesa is dynamic.

One of my favorite projects in Kenya is Bangla Pesa. Besides being greatly underappreciated as an example of how to empower rural and informal communities, its perception is a great example of the miseducation of pesa. Back in 2013 the members of this community currency project were arrested and paraded in the media as secessionists out to overthrow the national government.

Of course it was but a clear case of misunderstanding, like so many out-of-the-box ideas in Kenya.

When thinking about pesa, you gotta loosen up. We need look no further than Nairobi for 5 types of pesa in Kenya you’re likely to have come across.

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Why Bitcoin ATMs in Kenya are Dead on Arrival

Bitcoin ATMs in Nairobi are only a great idea on paper. Electronic ATMs have lost to human agents in Kenya

I get it. Bitcoin ATMs are cool. You can walk up to a machine, insert cash and instantly get cryptocurrency. But Bitcoin ATMs in Nairobi are only a great idea on paper.  

For cryptocurrencies to take off – for whatever use cases – people need a way to exchange their regular pesa in and out of the system. There is no way around this. It is the only way to bridge access and grow adoption. Calls for Bitcoin and cryptocurrency ATMs in Kenya and Africa typically stem from this access gap.

Unfortunately, this idea in Kenya and East Africa is dead on arrival.

The evolution of banking in nations, like Hong Kong, the US or the UK, took a vastly different form compared to East Africa’s much talked about mobile banking phenomenon. Any successful models for cryptocurrency adoption in East Africa have to be informed by local contexts. For starters, taking notes from existing digital money systems.

Agent networks – henceforth human ATMs – are the key to unlocking access.

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