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M-Pesa operator Safaricom will not be required to grant access to bitcoin startup BitPesa amid an ongoing legal dispute. What are the consequences?
“M-Pesa operator Safaricom will not be required to grant access to bitcoin startup BitPesa amid an ongoing legal dispute.” This was the ruling on the 14th of December 2015, by a Kenyan High Court judge. What does this imply for Bitpesa as a company? How does this affect the Bitcoin environment in the sub-region? Is Bitpesa rattled by this development?
It has been a series of speculations since the news broke of the joint suit by Lipisha and Bitpesa against Safaricom for the abrupt cut-off from M-Pesa, a platform of Safaricom which served Bitpesa until the 12th of November 2015. The dust seems to be settling even though the dispute is still ongoing. Preliminary judgement has gone in favour of Safaricom and this leaves investors wondering what becomes of the Bitcoin company, Bitpesa.
In her official release after the High Court ruling, Elizabeth Rossiello, the CEO of Bitpesa remains confident that her company has gone beyond the stage where Safaricom’s action will cause any significant harm to the growth of the company.
In her words, Elizabeth says:
“For a start-up, East Africa is not for the faint of heart; it is for the big of heart. And no one has a bigger heart than Team BitPesa. Investors, partners, and customers recognize the strength of our team’s bonds. We love having built our company from Kenya and are proud to be expanding rapidly across the African continent. We are passionate about our work, our markets, and our customers. This passion has driven us to steadily and continually accomplish our goals; every month, every quarter. We are now live in four countries, across five mobile money networks, with instant access to over sixty banks, all backed by an incredible team of twenty people on three continents.”
Elizabeth went on to state that Bitpesa is not in direct competition with Safaricom’s M-Pesa. She emphasized that while M-pesa is a domestic mobile money network, Bitpesa goes beyond the borders of the East African Country by enabling global digital transactions that build bridges between African companies and those around the world.
Talking like they were prepared for the prevailing situation, she said that while Bitpesa’s first integration and corridor did connect the global bitcoin network to M-Pesa, the BitPesa team quickly added payout and collection corridors to and from Kenyan banks, Nigerian banks, and five other mobile money corridors in Uganda, Tanzania, Nigeria, and even Kenya and that as a company founded in Kenya, Bitpesa built on M-Pesa, but as a pan-African enterprise, it has gone above and beyond M-Pesa.
Going by Elizabeth’s assertion, it becomes easy to think that Safaricom’s action towards Bitpesa is like fetching a pail of water from the sea and expecting the sea to run dry as a consequence. Even though she does not particularly insist that the issue is totally insignificant, she exudes a high level of confidence that Bitpesa’s structure has gone beyond the stage where this matter will cause any significant harm to the company.
“ As a company founded in Kenya, we built on M-Pesa; as a pan-African enterprise, we have gone above and beyond M-Pesa.” She says.
George Basiladze on the other hand retains a less optimistic opinion towards the situation as he described it as an “extremely difficult matter”.
George is the founder of the Bitcoin payment gateway Cryptopay.
With reference to the fact that the litigation is still an ongoing process, George had a more technical analysis of the situation. He says that despite the preliminary judgement going in favour of Safaricom with the Court ruling that “Safaricom will not be required to grant access to bitcoin startup BitPesa amid an ongoing legal dispute”, Bitpesa still has a chance of winning the case. Meanwhile, he maintains that Safaricom has the right not to provide the services to BitPesa and InterSwitch. “It is the right of any company to choose its clients and Safaricom would not serve Bitpesa.” Says George.
He continued by saying that an alternative scenario is that Bitpesa could partner with Safaricom directly, either by equity investment or revenue sharing.
On whether investors will hold back in moving into the African Bitcoin market pending the outcome of the legal process between Bitpesa and Safricom, George says;
“I do not think so, but it would definitely play a big role.”
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