A legal battle pitting telecoms
operator Safaricom and a company
owned by President Uhuru Kenyatta’s
Cabinet nominee for the ICT docket,
Joe Mucheru is behind the Central
Bank of Kenya’s (CBK) latest warning
against dealing in digital currencies
such as bitcoin, the Business Daily
has learned.
The CBK advisory, which was
published in the local newspapers
Tuesday, effectively throws a spanner
into the works for BitPesa Limited — a
Nairobi-based bitcoin trading platform
that is linked to Safaricom’s mobile
money service, M-Pesa.
“The CBK reiterates that 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,” CBK governor Patrick
Njoroge said in the notice.
The CBK’s quest to slam the brakes on
use of bitcoin in Kenya comes at a
time when BitPesa is locked in an
acrimonious court battle with
Safaricom over the telecom operator’s
decision to terminate M-Pesa
payments to the platform’s gateway
dubbed Lipisha Consortium.
Mr Mucheru, the ICT minister-
designate, is both a director and
shareholder in the firm, making his
appointment to the docket significant.
Through the BitPesa platform, users
can convert bitcoin into Kenya
shillings and use it to make retail
payments or remittances via M-Pesa.
The use of bitcoin, a virtual currency
that was founded in 2009 by Australin
techie Satoshi Nakamoto, has grown
exponentially but its existence outside
the world’s regulated financial
markets has caused concern, forcing
some countries to impose a ban on its
use.
“Virtual currencies are traded in
exchange platforms that tend to be
unregulated all over the world and
consumers may therefore lose their
money without having any avenue for
legal redress in the event these
exchanges collapse or close
business,” warned Dr Njoroge.
Unlike traditional currencies that
partly derive their value from the faith
that users put in the issuing
governments, bitcoin is not created,
regulated or backed by any central
bank.
Instead of being minted or printed,
bitcoin is digitally created through a
process named “mining” and its
exchange rate with conventional bills
is determined by supply and demand.
Dealers on Tuesday evening quoted
the Kenya shilling at 48,675/45,223
against bitcoin while the rate against
the greenback was $476.04 to a
bitcoin, according to data from
BitPesa.
Kipochi and TagPesa are the two other
platforms in Kenya that link M-Pesa
accounts to the volatile world of
bitcoin.
The increased activity of virtual
currency exchanges playing out on
Kenyan soil once again cements
Nairobi’s position as Africa’s Silicon
savannah, even in grey markets of
digital currency.
Mr Mucheru, who was vetted on Friday
last week, said the CBK and
lawmakers should move to develop
regulations for crypto-currencies
likening it to the advent of pioneer
mobile money platform M-Pesa which
was viewed with suspicion at its birth
in March 2007
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