Kenya’s Central Bank Distances Itself From Bitcoin

10211902263_495d100503The Central Bank of Kenya has issued a warning to persons trading in bitcoin and other virtual currencies that the cryptocurrencies are insecure and could be used to fund criminal activity.

In a public notice [PDF], the CBK stated that Bitcoin and other virtual currencies are not recognized as legal tender in Kenya, and as such, it would not protect users in the event the platforms that exchanges or holds the virtual currency fails.

“Domestic and international money transfer services in Kenya are regulated by the Central Bank of Kenya Act and other legislation. In this regard, no entity is currently licensed to offer money remittance services and products in Kenya using virtual currency such as Bitcoin,” the notice said.

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The move follows similar statements from China and Ireland warning against the possible use of bitcoin and other cryptocurrencies in financing terrorism and money laundering due to the untraceable and decentralized nature of their transactions.

The Central Bank has warned that cryptocurrencies are largely unregulated, as they do not have the backing of assets. Their value is volatile, and users are likely to lose out as its value fluctuates wildly.

“Virtual currencies are traded in exchange platforms that tend to be unregulated all over the world”, the notice added. “Consumers may therefore lose their money without having any legal redress in the event these exchanges collapse or close business. The public should therefore desist from transacting in Bitcoin and similar products”.

Bitcoin is currently experiencing a price surge globally, with one unit trading at 46,750 shillings, the highest since 2014.