Soon the country will have to bow to pressure and accept the use of virtual currencies, Principal Secretary Information Communication Technology Sammy Imetere has said.
The PS said though the regulator, Central Bank of Kenya(CBK) is against allowing the likes of bitcoin and bitpesa currencies to be used, the regulator will soon have to accept the innovations are here to stay.
"It was the same case with mobile money and as bankers back then we said no one who is not a licensed banker should be allowed to provide financial services similar to the institutions. However, it was just a matter of time and M-Pesa was everywhere," said Imetere.
Imetere said Kenya cannot lag behind when in some of the innovations taking place globally yet the country is very receptive to new technologies.
"These are the innovations that spearhead our economies by easing movement of cash flow making businesses thrive, and start up easily boosting our gross domestic output. There is a ready market out there that is waiting to be conquered," he added.
CBK has for long strongly maintained that bitcoin and other virtual currencies are not a regulated legal tender in the country. Hence in the event that platform that exchanges or holds the virtual currency fails or goes out of business, no protection will be offered.
Transactions are largely untraceable and anonymous hence susceptible to abuse by criminals in money laundering. More so, there is no underlying or backing of assets and the value of virtual currencies is speculative in nature. This may result in high volatility in value of virtual currencies thus exposing users to potential losses," read a statement by CBK dated December 2015.
Other countries that have banned virtual currencies are Vietnam, China, and Iceland, India and Bangladesh. In 2015, Kenya's leading Mobile Money service provider Safaricom M-pesa was pressuring for bitcoin to get registered before it continues riding on its network.
In the United Kingdom and United States, virtual currencies operate as a Money Service Business but not as a legal tender.
The PS was speaking during the launch of Deloitte Technology, Media Telecommunications Predictions report for 2016 in Nairobi. The report noted that about 60 per cent of Kenyans are afraid of making virtual transactions over security issues.
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Only 34 per cent will make online transactions on mobile money in 2016 majority of them being aged 25-34 years old.