Kenya's Senate seeks to legalise digital currencies

Kenya is making significant strides in the world of digital currencies, with the Senate seeking to legalize these forms of financial transactions. Ranked first globally for peer-to-peer cryptocurrency trading volume and fifth worldwide for total cryptocurrency activities, Kenya has shown a growing interest in embracing this innovative technology. According to the United Nations Conference on Trade and Development, 8.5 per cent of the population, approximately 4.3 million people, own cryptocurrencies in the country. This surge in cryptocurrency ownership has propelled the Senate Standing Committee on Information, Communication and Technology to engage with the Central Bank of Kenya to recognize digital currencies as legal tenders. In a recent interview with CNBC Africa, Senator Allan Chesang, Chair of the Committee in ICT, shed light on the Senate's initiatives and vision for the future of cryptocurrencies in Kenya. The key theme that emerged from the interview was the Senate's aim to strike a balance between fostering innovation and safeguarding the interests of Kenyan citizens. Senator Chesang emphasized the importance of developing a comprehensive regulatory framework to oversee the use of cryptocurrency in the country. This framework, still under debate, will cover aspects such as licensing, registration, anti-money laundering regulations, consumer protection, and taxation for cryptocurrency transactions. While acknowledging the potential risks associated with digital currencies, such as volatility and financial instability, the Senate aims to create guidelines that mitigate these risks while enabling Kenyans to leverage the benefits of cryptocurrencies, such as enhanced financial inclusion and faster transactions. Senator Chesang highlighted that Kenya's vibrant digital economy and tech-savvy population make it primed for the adoption of cryptocurrencies. The country's familiarity with mobile money platforms and increasing interest in financial technologies position Kenya as a potential leader in the field. Despite concerns raised by organizations like the UNCTAD about the impact of cryptocurrencies on monetary sovereignty, Senator Chesang believes that the Senate's push for a central bank digital currency (CBDC) backed by the government will address these challenges. By advocating for a CBDC and engaging with commercial banks and fintech companies, the Senate aims to expedite the adoption process and ensure a smooth transition towards digital currencies. When asked about the potential downsides of digital currencies, Senator Chesang emphasized the importance of public education and regulatory oversight. He expressed optimism about the future of cryptocurrency in Kenya and Africa, citing factors such as mobile money adoption, remittances, and the regulatory environment as key drivers of growth. In conclusion, the prospects for cryptocurrency in Kenya and Africa are promising. By embracing this digital innovation and implementing a robust regulatory framework, Kenya has the opportunity to enhance financial inclusion, improve efficiency, and reduce transaction costs for its citizens.