The Central Bank of Kenya is buying newspaper ads and using social media to warn citizens against using Bitcoin and other unregulated digital currencies in Kenya saying they could be used to fund terrorism and are insecure.
Because the transactions can’t be traced, the Kenyan government is connecting Bitcoin to terrorism and money laundering, DailyNation reported in AllAfrica.
In a public notice, the central bank said it is the only regulator of currencies in Kenya. “Domestic and international money transfer services in Kenya are regulated by the Central Bank of Kenya Act…No entity is currently licensed to offer money remittance services and products in Kenya using virtual currency such as Bitcoin.”
Here’s an excerpt from the public notice, according to Quartz:
Virtual currencies are traded in exchange platforms that tend to be unregulated all over the world. Consumers may therefore lose their money without having any legal redress in the event these exchanges collapse or close business. The public should therefore desist from transacting in Bitcoin and similar products.
In issuing the warning, the Central Bank of Kenya is following the lead of other governments that have warned citizens to stay away from unregulated virtual currency. It’s also getting involved in a deepening divide between Safaricom — the country’s main telecom — and Bitpesa, a 2-year-old remittances company that uses Bitcoin, Quartz reports.
Bitpesa and another startup, Lipisha, are suing Safaricom for intimidation and cessation of service without notice for blocking their access to Safaricom’s widely used mobile money platform, Mpesa, Quartz reported.
The day before the central bank issued its public service announcement, a Kenyan High Court judge ruled that Safaricom does not have to grant Bitpesa and its partner access while the court case proceeds.
Ironically, the fight is between two companies that are both using technology to improve life for Africa’s still-disadvantaged middle and working classes, according to Quartz. Mpesa enables “unbanked”customers to transfer, use, or store cash on their cell phones. It has helped raise the rate of Kenyan adults with access to formal financial services from to 41-to-67 percent.
Bitpesa aims to reduce the cost of money transfers for Africans living and working away from home. Africans spend double the global average to send remittances, according to Quartz. Through Bitpesa, users can transfer bitcoin and then convert it into Kenyan shillings.
Bitpesa said it is working with a firm called Airtel Money to offer services in Kenya while the case proceeds, Coindesk reported.
“We are pleased with the high court’s ruling, which permits Bitpesa to continue to fight Safaricom’s wrongful and unlawful bullying,” Bitpesa said in a statement. “The court has not dismissed Bitpesa’s case, but rather has ruled only that Bitpesa is strong enough as a company that it does not require access to M-Pesa to survive during the course of the case.”
Meanwhile Central Bank of Kenya warned that it will not protect users if the platform fails that exchanges or holds the virtual currency, DailyNation reported.
“No entity is currently licensed to offer money remittance services and products in Kenya using virtual currency such as bitcoin,”the central bank said. “Bitcoin and similar products are not legal tender nor are they regulated in Kenya. The public should therefore desist from transacting in bitcoin and similar products.”