Why Kenya’s Central Bank Demonizes Bitcoin, Frames It as ‘Illegal’
In a backward move, the Central Bank of Kenya (CBK) has outlawed Bitcoin directing and cautioning Kenyans to reject it.
In a statement, the Central Bank of the Eastern African Nation claimed Bitcoin could be a conduit for terrorist financing and money laundering.
It was a significant blow against Bitcoin penetration in a country that is among a few in Africa with an encouraging adoption rate. December is precisely a year since the CBK created the upset, and Cointelegraph spoke to Mic Kimani, a Kenyan Bitcoin Expert, Enthusiast and CEO of Umati Blockchain LTD, about the backlash from this retrogressive policy.
Mic is completely confident the highest monetary authority of his country has done the people a great disservice and could have done a better job.
"The accusations are a bit over the top. The Central Bank got some things wrong in its notice, like casting a wide blanket warning against virtual currencies, yet here in Kenya, we already have a lot of virtual currencies in use like Bonga points, and electricity tokens."
Central Bank’s Directive
Cointelegraph: Are there any setbacks for Bitcoin in Kenya based on this directive from the Central Bank?
Mic Kimani: Yes, as a direct result of poor communication. The public warning implied virtual currencies such as Bitcoin to be illegal, which they are most definitely not. When I talk to people, their interpretation of the notice was ‘Bitcoin is illegal.' So, the framing of the notice distorted the facts, giving Kenyans the wrong impression about this exciting technology.
It is true that Virtual currencies like Bitcoin and Bonga points are not legal tender, money issued by the government. But so are a lot of other currencies, like airtime, Bonga points, and even mobile money. If you look around Kenya, today, we are already using different types of virtual currencies that are not legal tender - electricity tokens, Bonga points.
Bitcoin has desirable qualities like asset appreciation and fast online payment which some Kenyans are genuinely interested in. I think Kenyans deserve an opportunity to decide for themselves. Bitcoin is complementary, and both digital currencies and legal tenders can co-exist
CT: Would you say politicians are scared Kenyans would shun fiat for crypto?
MK: Politicians, in my opinion, would take a keen interest in crypto because of some of its protean qualities. I cannot speak for all of them, but I have broached the subject with one.
He found Bitcoin’s price appreciation over the past four years, and the idea that Bitcoin as a store of wealth and value that cannot be seized, fascinating. In the past, politicians who have spoken out against oppressive governments have had their assets seized to silence them. With Bitcoin, this is no longer a concern for reform activists. That sort of thing.
The Future of Bitcoin in Kenya
CT: Do you think the public believe these claims and directives coming from the Central Bank?
MK: Some part of the public believes whatever authorities say, even if it has not been substantiated. The CBK notice is an excellent example of how misinformation spreads. Fortunately, there are also a lot of Kenyan people who can research for themselves, and make up their minds on the subject. These are the people who give me hope, and most of them happen to be young.
CT: Any possibility the government would rescind its decision?
MK: Yes, most definitely. It all depends on how Bitcoin grows in the rest of the world. We are not separate from the global economy and trends, so when adoption picks up in other countries, we will have to react and jump in on this budding technology. Already, Kenyan banks are talking about Blockchain, after witnessing other banks and FinTech companies from Europe, China, Australia and South Africa make headways with this new technology.
I believe it's only a matter of time and when, not if.
CT: Could you paint a picture of the future of Bitcoin in Kenya?
MK: Young Kenyan entrepreneurs trading in the China - Kenya corridor turn to Bitcoin as an alternative currency for making payments to their electronic suppliers in China. For these importers, the money is fast, settles instantly within an hour and is low cost compared to bank wires to Asia. In 2016, 50 percent of Bitcoin trading volumes are in Chinese renminbi.
Young Kenyans invest in Bitcoin as a new asset class through their savings groups and Chamas to diversify their portfolio. A global asset that is locally available through a mobile phone. You can’t make this stuff up!
Online freelancers ask to get paid in Bitcoin from their direct clients and freelancing platforms. They say it is cheaper and faster. There are no transaction fees and forex exchange conversion costs.