Why the Central Bank of Kenya should hasten and Regulate Digital Currencies in Kenya

In 2019, the Central Bank of Kenya issued a warning to banks and financial institutions against processing transactions that were Crypto related. Fast forward to 2022, Crypto Currency and Digital Coins are not backed by the government, are still not regulated, and are not recognized as legal tender in Kenya. Is not regulating cryptocurrencies a good move or a limiting move to the Kenyan economy? In an unregulated environment, Kenyans are still trading and receiving payments in digital coins and digital currencies. So as the body in charge of regulating money and the use of money in Kenya, Is the central bank sitting on golden eggs waiting, or are they limiting its use?
In this article, we will seek to further evaluate the opportunities that have been presented by digital coins in Kenya in an unregulated environment and why the Central bank of Kenya should move fast and regulate digital coins.
In an era of a global village and border less countries, international trade has grown to unimaginable volumes. Companies and individuals have learned to trade their goods and services in spaces that in the past would be termed as dangerous and unreachable from the comfort of their homes. In Kenya for instance, a country that is infrastructural advance with automated Ports and advanced airport services, goods are cleared on an hourly basis, the process is bureaucratic and encourages corruption, to evade these barriers and bottleneck issues, Kenyan traders, though quite aware of the non-government backing, have resulted to introducing payment methods via digital coins that are fast and reliable.
Software designers and programmers have integrated payment gateways and platforms with locally available payment options. Think about it, to develop and program software and payment platforms and include local currencies and local banks as recipients of payments takes risk. The Central Bank should think about ways in which they can capitalize on local software developers and back them up in terms of upgrading their skills.
Talk and think about the E-commerce boom in Kenya, many new trading platforms are currently in use by traders, farmers, manufacturers, and individual customers. Some of the traders are international traders and would prefer to receive their payments as digital coins as opposed to bank accounts.
Infrastructure has boomed in Kenya with roads having automated toll collection points and automated parking spaces being availed by local municipalities. Many opportunities have been presented by this boom. First of all, having alternative payment methods is a requirement to ease traffic congestion and long toll lines. What better way to top up parking and toll cards than the use of digital currencies. The coins are digital and already integrated with the local payment methods.
International companies and multinationals have set foot and are eyeing Kenya as a potential hub for their satellite offices. With the use of Crypto and digital currencies, salary and wage receiving methods will be made easy and fast and is probably the most reliable way of paying staff both local and remote.
Not regulating digital currencies and Cryptocurrencies has not only encouraged Kenyans to engage in crypto trading activities but has offered alternative payment options that are easily integrable with local payment gateways.
So why should the government hasten the process of regulating the use of cryptocurrencies? First of all, regulating the use of digital and even recommending the use of one digital coin will not only make the trading environment safe but will create rules as to how trading should be done.
Secondly, the government will be able to collect taxes from digital coins and payment gateways. Currently, trading is done underground with payments being done on non-government regulated platforms. The government can earn revenue and levies from the authorized use of digital coins.
Thirdly, many opportunities currently present themselves in the regional trading blocs such as ECOWAS and even EAC. With the authorization of digital coins, other African countries will have the confidence and also authorize trading with digital coins as a way of opening up the region to international investors and making receiving of payments fast.
Fourthly, digital coins are not easily forged and printed. Unlike printed money, digital coins are safe as they are virtual and the coins have unique encryption and are hard to copy. This will save the Central bank from having fake money circulating in the financial environment.
Fifthly digital coins have been known to foster an environment of creativity as new coins are developed and tested on a day-to-day basis and thereby create employment for persons who act as traders or even computer science specialists who develop software and trading platforms.
Lastly, the Central bank of Kenya is in the process of developing the first-ever central bank digital coin. With the introduction of CBDC, there will be a need to also approve other digital coins that will be used alongside the CBDC.
In conclusion, although the central bank of Kenya has in the past ignored digital coins and cryptocurrencies with the economist warning that the introduction and encouraging the use of cryptocurrencies will not only open up a can of worms in terms of cyber-crimes, forgery, and course loss of revenue, the magnitude of the volume of trade of Cryptocurrencies and use of cryptocurrencies can no longer be ignored.
The Central Bank should therefore step in, and come up with regulations and laws to prohibit and encourage the trading of crypto. By doing so, they will not only have opened up Kenya as an attractive modern, and ready to trade market and will be seen as a company that embraces technology, is willing to adopt new payment options, create employment for its young and talented workers and let’s not forget setting a pace for other countries in the regional trading bloc.
So what can Kenyans expect after the regulation of crypto and digital coins? First of all, we would expect more job opportunities as cryptocurrencies traders and also remote workers. Secondly; we would expect to see more and more multinationals setting up their hub and satellite offices in the country and lastly we would expect faster payment options that will allow us to pay and receive payments at our earliest convenience.
Should we, therefore, continue to trade in Crypto and even receive payments? Yes by all means. By doing so we not only increase the trading volumes but we continue to create confidence in the use of the crypto coins.