The Kenyan parliament has given the Secretary for National Treasury Cabinet, Henry Rotich a two-week ultimatum to decide whether cryptocurrencies should be accepted as a legal tender or not in the country.
Before the deadline, the Secretary is expected to have explained why the Treasury and the Central Bank of Kenya (CBK) have allowed individuals and firms Kenya to exchange bitcoins and other digital currencies, while they are yet to be regulated, with no appropriate license or being taxed by the Finance and National Planning Committee. According to Business Daily, the chairman of the Committee, Joseph Limo, stated that:
“We are surprised to hear that even the CBK is not aware that there is a lounge at Kenyatta University, an ATM in town, and a hotel in Nyeri which trade in bitcoins. There is a bigger problem in Kenya since people are trading billions in virtual space yet the Treasury has not licensed and taxed it like trade in M-Pesa and bank transactions.”
Cryptocurrencies make use of cryptography for security, and their decentralized nature means that a central government or state authority can not circulate them. Because they are decentralized, digital currencies allow users to manage their digital assets with no control from other parties like governments or any regulatory agency.
The Central Bank of Kenya had previously issued several warnings to the citizens and financial institutions not to make transactions with cryptocurrencies.
Rotich went on to dismiss digital currencies by terming their prices as volatile. He described that Bitcoin’s price fall from $19,300 in 2017 to $8,500 in 2018 shows its instability. He added that the Kenyan government is yet to make its decision on whether trading of virtual currencies will be permitted in the country as it is still a developing technology.
The secretary revealed that there were current deliberations on how to appropriately regulate cryptocurrency exchange to reduce potential risks such as global money laundering. Rotich said that “I am not aware of people operating locally. But I will endeavor to find out whether we have local exchangers. The issue of cryptocurrencies is evolving, and we can take a position as a country. This is a delicate balance between supporting innovation and killing it.”
Meanwhile, financial authorities appear to be considering whether the Kenyan government should support or to keep avoiding the innovation. The government has been reluctant to adopt cryptocurrencies, insisting that it could not embrace it because they consider it as a kind of “bubble.”