The last couple of months has seen the rise, and depending on who you ask, a marginal drop of digital currencies. This development is one of the hotly discussed topics across the country as enthusiast try to piece together the state of non-official currencies as there is no solid legal framework that safeguards the legitimacy of them, or lack thereof.
With a significant investment in this niche, a feat that has extended its turf in daily business operations, the Central Bank of Kenya (CBK) has warned people that it will not be part of potential losses incurred by users while performing bitcoin-related transactions. This is because of the aforementioned point regarding a non-existent legal background that ties CBK to virtual currencies. In other words, the currency does not qualify as a legal tender in Kenya.
The onset of bitcoin and its associated payment systems has spurred the conceptualization of similar products in the cryptocurrency space. This development is rather rapid in a world where bitcoin enjoyed exclusivity since 2009. While the legitimacy of competing products is unquestionable (supported by multiple forums and fintech institutions that focus on popularizing them), the CBK is adamant in embracing bitcoin-like items.
This comes after earlier statements by key players in the local financial market that warned people from investing into virtual currencies, citing stability issues, popularly referred to as a ‘bubble.’
The number of Kenyans who have jumped into this train is large, with current cryptocurrency investments valued at KES 163 billion. While it is obvious that investors are confident in their trade, that valuation could cause an economic pain were virtual currencies to collapse. At the same time, as stated by Citibank, Kenya’s cryptocurrency holdings constitute 2.3 percent of the GDP, a feat that cannot be ignored or unregulated in the long run.
Only time can define the progress of bitcoins in the long run.