Kenya has the highest number of crypto account holders in Africa. The current number stands at 4.6 million active accounts, which translates to a percentage of 8.52% of the entire population. This is the 3rd highest % in the world. This statistic is shocking, considering that the Central Bank of Kenya, through the treasury, has issued advisory warnings. It has also expressed its reservations regarding transactions in cryptocurrency and digital currency. The government of Kenya, through the treasury, has indirectly created an environment that has fostered cryptocurrency and digital currency growth. In this article, we shall look at how they have done this. We shall also check how better they can make the environment more advantageous for the future.
What is cryptocurrency
Cryptocurrencies are digital coins that can act as physical coins. Cryptocurrency or crypto is a digital currency designed to work as a medium of exchange through a computer network. Cryptos are not reliant on any central authority, such as a government or bank, to uphold or maintain them. Kenya’s most common types of cryptocurrencies include Bitcoin, Litecoin, Cardano, and Ethereum.
How cryptocurrency works
Cryptocurrency doesn’t exist as physical money but exists as digital entries stored in digital wallets. Some of the common uses of cryptocurrency in Kenya include:
- Paying for entertainment services
- Purchasing luxury items on Ebay and Amazon
- As insurance for the future
- Buying Virtual Art and NFT
- Buy online games and technological websites.
Risks in using crypto
There are many risks in using cryptocurrencies:
- Firstly, since they are not traceable, cryptocurrencies have been used to launder money and pay for illegal activities.
- Secondly, cryptocurrencies are volatile, and keen investors can lose all their money and hard-earned savings due to the prices.
- Thirdly, cryptocurrency exchange platforms require internet connectivity to operate, which hinders many persons who might have access to the internet.
Can anyone own cryptocurrencies? Yes, opening a crypto wallet is easier, and anyone can open an account. The different ways the government of Kenya is in the cryptocurrency space.
- Issuing trading licensing and business licenses for international firms and multinationals that deal with cryptocurrencies. These companies set up their remote offices in Nairobi and other towns in Kenya and hire local talent as onsite and remote workers.
- Allowing parastatal and state-owned agencies to diversify their resources and input to contribute to crypto mining and crypto agencies. Crypto mining is an electricity-consuming activity requiring approximately 150 Terawatt hours of electricity manually. Very recently, clean power generating companies announced they would share their excess generated clean power with crypto mining agencies.
- The government has earned revenue through partnerships and sponsorship of events. It has been able to earn more through taxation and shared revenue models.
- Issuing advisory warnings and reservations to financial institutions and their citizens against unregulated Payment systems and services. Through the Central Bank of Kenya (CBK), it has the mandate to oversee and regulate payment systems. Cryptocurrency and digital coins lack structure and are unregulated and volatile. Therefore they pose a risk to the existing traditional financial systems, and as a result, Kenyan citizens are warned against trading and accepting them as a form of payment.
- Encouragement of financial institutions and citizen participation in Digital Currencies and Cryptocurrencies launches and introduction. The Central Bank of Kenya has been researching having a digital currency that will operate alongside the physical currency. In February 2022, the central bank invited the general public to give comments on Cryptocurrencies and the Central bank’s digital currency. Through town hall meetings, the government can open safe spaces for its citizens to have open discussions.
- Signing Acts and Laws that govern the use of cryptocurrency in the country. By coming up with Acts and laws regulating cryptocurrency, the government can ensure that its citizens have a safe place for crypto. Secondly, the law has repercussions for persons who act against persons who violate the Act.
- Issuing research grants for alternative payment systems and construction of Hubs. The government, through the Ministry of ICT, has created research HUBs. People with technological know-how work together to research Cryptocurrencies and design platforms where they can be traded within given financial systems.
- The Ministry of Education has developed curriculum and training courses to train and prepare its citizens for the future. The curriculum is made understandable across all education levels. In addition, the government Funds student clubs like AISEC to empower young students to learn additional skills that include cryptocurrency and Forex trading.
- The government has authorised associations such as the Blockchain Association of Kenya as an advisory body to guide and inform its citizens.
To sum up, the government’s direct and indirect involvement has seen the growth of cryptocurrency in Kenya. Through its involvement, cryptocurrency has created jobs for its citizens and put Kenya on the map as a progressive country that embraces technology and is ready for investment. As citizens, we can only use cryptocurrency as a way of trade, knowing that the government has created the right environment to protect us as its citizens.