Central Bank warns against use of Bitcoin

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By Regina Manyara

Kenyans have been warned against transacting using virtual currency such as Bitcoin.

The Central Bank says users of such platforms may lose their money without having any legal redress in the event these exchanges collapse or close business.

According to the World Bank, Sub-Saharan Africa is the most expensive region to send money to with high transactions costs eating into billions of dollars that could otherwise go to recipients in the continent.

With the current success of mobile money transfer service digital platforms such as Mpesa, local businesses are capture the Diaspora remittance market using technologies like digital currency. However, the Central Bank of Kenya wants Kenyans to be more careful and only transact using licensed platforms.

CBK notes: “Bitcoin is a form of un-regulated digital currency that is not issued or guaranteed by any government or central bank. 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 or holds the virtual currency fails or goes out of business.”

CBK says the value of virtual currencies is speculative in nature which may result in high volatility in the value of virtual currencies thus exposing users to potential losses. In addition, the central bank says such platforms are vulnerable for use to enhance unlawful activities.

It adds; “Transactions in virtual currencies such as bitcoin are largely untraceable and anonymous making them susceptible to abuse by criminals in money laundering and financing of terrorism.”

While noting that Bitcoin and similar products are not authorized in Kenya, the central bank warned the public to desist from transacting in Bitcoin and similar products.

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