Central Bank of Kenya Issues Warning Against Cryptocurrencies

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Photo from BuzzKenya

The Central Bank of Kenya (CBK) has blacklisted cryptocurrencies and issued a warning last week to all banks against its use due to concerns on consumer protection.

Regulators around the world have varying approaches to cryptocurrency technology. While a lot of countries have opened their doors to it, some still regard it as a potentially dangerous threat to society that could disrupt the status quo.

Patrick Njoroge, the Governor of the CBK, has made his stance on the technology clear as he addressed the National Assembly Committee on Finance at Parliament Buildings. He announced that the central bank has issued a banking circular against cryptocurrency transactions:

“A banking circular was also issued to all banks by CBK cautioning them against dealing in virtual currencies or transacting with entities that are engaged in virtual currencies.”

Njoroge added that other financial regulators around the world have also had similar responses to the technology.

He believes that because cryptocurrencies are decentralized currencies, they are prone to misuse:

“There are risks associated with cryptocurrency particularly on consumer protection, fraud, hacking, and loss of data and they are prone to be used as pyramid schemes.”

Njoroge stressed that while the CBK was supportive of innovation, some technologies–like cryptocurrencies–pose risks to the financial sector.

The CBK has previously issued a notice to the public in 2015 to discourage them from dealing with cryptocurrencies for the same reasons.

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