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CBK warns Kenyans against using virtual currencies

By EVELYNE MUSAMBI and HILARY KIMUYU

Central Bank of Kenya has issued a public notice warning to the public over the use and circulation of virtual currencies such as Bitcoins.

The notice that was published on Business Daily by the Central Bank of Kenya (CBK) stated that the digital currency is unregulated and is not issued or guaranteed by any government or the regulator.

“The attention of the Central Bank of Kenya (CBK) has been drawn to media reports on the use, holding and trading of virtual currencies such as Bitcoins in Kenya,” the notice read.

“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 of holds the virtual currency fails or goes out of business.”

The regulator listed some of the risks of digital currency citing the fact that the transactions are untraceable, the service is susceptible to abuse by criminals in money laundering and financing terrorism.

CBK added that customers may lose their money or incur losses during transactions and cannot seek legal regress as the platforms are unregulated.

REGULATION AND INNOVATION

The regulator then urged that “the public should therefore desist from transacting in Bitcoin and similar products.

Bitcoin Africa on Tuesday tweeted, “The Kenya #Bitcoin Community we still stand strong. The price is on our side. Regulation and Innovation never at par.”

In Kenya Bitcoins transactions has been facilitate by a startup called Bitpesa which recently along with its partner Lipisha sued Safaricom citing intimidation and suspension of its money transfer service.

Safaricom, during the November hearing defended its decision to cancel service for the Lipisha money transfer operator, saying it failed to adhere to the anti-money laundering law.

The mobile phone operator said since Lipisha had not obtained necessary authorisation from the Central Bank of Kenya’s money remittance regulations, it has been difficult to account for them.

“Safaricom has stringent reporting obligations of the Proceeds of Crime and Anti-Money Laundering Act, which it could not fulfill in view of Lipisha’s relationship with Bitpesa,” said Mr Isaac Kibere for Safaricom.

High Court Judge Joseph Onguto said he would rule on whether to lift the suspension on December 14, but directed that the status quo is maintained.