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The Kenyan Central Bank is Hampering Bitcoin Adoption in Kenya

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Bitcoin Community in Kenya

The bitcoin space in Kenya is among the most vibrant in Africa with the capital Nairobi being home to a number of innovative bitcoin startups. This is partly due to a growing bitcoin community, the rise of a local fintech industry, and upgrades to the country’s infrastructure. However, bitcoin adoption in Kenya is being hampered by the regulatory climate in the country that is being negatively influenced by a bitcoin-unfriendly central bank.

The Central Bank Issued a Warning about Digital Currencies

Back in 2015, the Central Bank of Kenya (CBK) issued a statement that warned against the use of bitcoin saying it was not a legal tender and could be used as a conduit for money laundering and terrorism financing.

A number of people in the Kenyan bitcoin space voiced their dissatisfaction with the announcement. Speaking to CoinTelegraph, Kenyan bitcoin thought leader and CEO of Umati Blockchain Ltd, Mic Kimani, stated,

“The accusations are a bit over the top. The Central Bank got some things wrong in its notice, like casting a wide blanket warning against virtual currencies, yet here in Kenya, we already have a lot of virtual currencies in use like Bonga points, and electricity tokens.”

The CBK further instructed local banks not to provide bank accounts to bitcoin startups. One such company was bitcoin payment processor, BitPesa which had its bank accounts shut down. The bitcoin startup that is headquartered in Nairobi has found it difficult to operate in the country due to the position taken by the CBK.

Bitcoin Startups Face Challenges in Kenya

Recently, BitPesa announced that it has been forced to retreat from the Kenyan market. Due to the CBK directive, bitcoin-related businesses are unable to open or maintain accounts with local banks. As a result processing payments in Kenyan shillings has become impossible for the startup and it has opted to halt the verification of new users.

South African bitcoin exchange and wallet provider Luno, has also stopped offering its bitcoin exchange service in the country and can currently only be used as a bitcoin wallet in Kenya.

BitPesa CEO, Elizabeth Rossiello stated in Disrupt Africa,

“While BitPesa is still a tax-paying, registered Kenyan company with a large office for its finance, trading, customer support and sales functions for the region, it is blocked from servicing Kenyan customers. This is a total shame, given that the company and the African bitcoin boom it started when it launched, began in Kenya.”

According to Rossiello, the CBK made the move to restrict BitPesa and other similar startups without consulting relevant stakeholders and without any type of in-depth research. She also maintained the position taken by CBK is in stark contrast to local bitcoin users and investors, who are largely infatuated with bitcoin startups. The actions of the regulator have impeded the growth of the company locally at a time when it was experiencing a significant bump in trading volumes across its other six African markets.

Little Progress by Way of Dialogue

A recent report by Disrupt Africa titled Finnovating for Africa showed how attractive cryptocurrency startups and blockchain technology are to investors, especially since they can develop cheap, efficient and secure products for customers who need them. These technologies have the potential to solve many challenges in financial services, record keeping, and identity management just to name a few.

Therefore, it is important for bitcoin and blockchain startups to actively engage regulators and local financial players. In the case of BitPesa, conversations with the CBK, however, are yet to yield any positive results.

“We have been working closely with the Nigerian Central Bank and have a great dialogue with other Central Banks in East, Central and West Africa, but we have still made little progress in Kenya, which remains the strictest jurisdiction in Africa, having gone out of its way to ban any bank from banking or partnering with companies using this technology,” Rossiello said.

It is worth noting that major global institutions such as the World Bank and IMF, and central banks of leading economies are publishing white papers on bitcoin and are softening their regulations to allow bitcoin startups to grow compliantly. It would be wise for the CBK to reconsider its stance since it impedes local companies from entering the bitcoin space and competing against international players. It remains to be seen if the CBK will adopt a more open approach towards cryptocurrency innovation but, for now, the situation looks rather unfavourable for Kenyan bitcoin startups.

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Almost a Quarter of High-Tech Consumers in South Africa Now Own Cryptocurrency

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High-Tech Consumers in South Africa

A new study titled “Digital Lifestyle Measure report” conducted by MBIT found that 23 percent of high-tech consumers in South Africa own at least one cryptocurrency, with bitcoin being the most common holding. 

New Report Shows High-Tech Consumers Hold Crypto

In the”Digital Lifestyle Measure report” report, each level of tech consumer (high, medium, and low) was grouped according to DM segmentation. A high-tech consumer is identified and tagged as a “DLM5 consumer”, and for the low-tech consumers, a “DLM1 consumer” was used. 

To place each of the participants in the right groups, the survey made use of a question and answer (Q&A) method. Each person was categorised according to how well they were able to answer the provided questions. The questions mostly focused on their private digital lifestyle and technological gadgets they own and can operate well.

The result of this survey shows that only six percent of the low-tech consumers (DLM 1) own crypto, while 23 percent of high tech consumers own cryptocurrencies. The remaining percentage was then shared in the order: DLM 2: seven percent, DLM 3: twelve percent, and DLM 4: eight percent.

cryptoThe report also stated that of the DML5 population, about 42 perfect of them are of the notion that cryptocurrencies are here to stay. Same goes for 30 percent of the DLM 4 consumers group.

Conversely, 41 percent of the low-tech consumers (DLM1 consumers) did not know what cryptocurrencies are all about, according to IOL

From the DLM 3 consumer group, about 34 percent of them cannot say what the future looks like for cryptocurrencies but 26 percent of them claimed cryptocurrencies to be the “future of financial transacting.”

The report has further shown that high tech consumers who are continually paying for something electronically, are more likely to buy crypto in the long run.

Based on the google trends data, South Africa currently has the highest levels of interest in bitcoin across the world. Hence, it should come as no surprise that tech-savvy South Africans are the ones investing in digital currencies and tokens. 

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Ecobank Report: Most African Regulators Are Taking a “Wait and See” Approach to Cryptocurrency Regulation

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African Regulators

While there has been a substantial increase in the adoption of cryptocurrencies in Africa compared to three years ago, there has been minimal effort from African countries to try and regulate cryptocurrencies despite their increased use in various African nations according to a new report by Ecobank.

Ecobank tracked “the current state of cryptocurrency regulation in all markets in Sub-Saharan Africa” through the regulatory responses that have been issued by central banks or financial regulators. In the report, the pan-African bank found that most African regulators are taking a “wait and see” approach when it comes to cryptocurrency regulation.

The report stated: “Many African governments and regulators recognise both the risks and the potential positive impacts of cryptocurrencies, and some also appreciate the difference between cryptocurrencies and the underlying blockchain technology. But they have been reticent in authorising cryptocurrency transactions, and mostly remain apprehensive about the potential risks. African countries appear to be looking to their neighbours to regulate and innovate first, and learn from their mistakes, rather than being the first mover.”

The reported noted that the main reason why African governments were being skeptical about licensing the use of cryptocurrencies was their citizens getting overexposed to cryptocurrency investments and there being a future crash that would cause a ripple effect in the broader economy.

African Regulators’ Stance

African RegulatorsOut of the 39 jurisdictions surveyed, more than 21 countries in the region are yet to make a public declaration on the use of cryptocurrencies.

So far, there have been three countries that have taken a stance on cryptocurrency. Namibia tops the list having banned the commercial use of digital currencies. However, South Africa and Swaziland are the only two countries in Sub-Saharan Africa that have adopted “a generally favourable and permissive stance, but without full legality”.

The remaining countries fall somewhere in between and “refuse” to directly regulate cryptocurrencies claiming that bitcoin and other digital currencies “operate in the grey area between legality and illegality” and have issued warnings to their citizens and investors against using or investing in them. The bank also noted that conversations regarding the speculative nature and instability of cryptocurrency prices have overshadowed their benefits and the potential they bring.

The bank went ahead to note: “Unfortunately, the spectacular rise and fall in the traded value of cryptocurrencies has drowned out broader discussion on the potential benefits this new technology could bring. The transformational impact that could be delivered by tokenising products and services on the blockchain has been compared to that of the Internet. Crypto tokens and currencies could enable consumers to transact instantly, cross-border and for free, provide them with KYC-compliant digital IDs, and incentivise their behaviour and change the way they engage with governments & service providers.”

Ecobank will continue to track cryptocurrency regulation in Sub-Saharan Africa and provide regular updates that will reflect the regulation progress in the African nations.

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Paxful Continues #BuiltWithBitcoin Charitable Initiative in Africa with the Construction of a Second School

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#BuiltWithBitcoin

Peer-to-peer bitcoin exchange Paxful announced the newest chapter in its #BuiltWithBitcoin charitable initiative: the construction of a school in Rwanda – for students aged six to fifteen – in the Nyamata Sector of Rwanda’s Bugesera District. This will be the second bitcoin-funded school that Paxful has raised funds for.

bitcoinContinuing its partnership with NGO Zam Zam Water, Paxful has kickstarted the project with a $20,000 donation. The total construction cost of the school is estimated to be $100,000. The remaining balance, Paxful hopes, will be raised through its fundraising campaign.

Donations can be made via Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Dash.  Paxful will match all community donations until the $100,000 goal is met.

“The #BuiltWithBitcoin initiative is a testament to the power of cryptocurrency,” said Ray Youssef, CEO of Paxful. He added:

“We firmly believe that it can improve lives and make the world a better place.”

The planned school is expected to be almost twice the size of the first bitcoin-funded school and will serve up to 300 primary school students upon completion. Furthermore, the school will include a cafeteria, a 35,000-liter potable water well, solar panels for sustainability, and many other resources for the education and enjoyment of students, staff, and faculty, according to a company press release.

“Education is a crucial tool for helping those in developing nations increase their standard of living, so we are very pleased to partner with Paxful to serve these bright young students,” said Yusuf A. Nessary, founder and president of Zam Zam Water. He added:

“This is only a small glimpse into what we can and will continue to do with the power of cryptocurrency.”

Paxful began the #BuiltwithBitcoin initiative in 2017 to promote philanthropy and charity within the cryptocurrency industry. The company plans to construct 100 African schools, as well as donate money for wells and other projects.

To contribute to #BuiltwithBitcoin, send all donations to Zam Zam Water:

BTC (Bitcoin): 3Q5CESP85hhXTLSy2HDbSyNchb5Bi8D7ku
BCH (Bitcoin Cash): 15YGniLxo77kfMUWGoRNT6ShUQC93MvaXg

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