In the wake of the buzz created by the 2017 cryptocurrency rally, governments are taking keen interest in their bid to cushion their citizens against the risks of investing in cryptocurrencies. The Central Bank of Kenya (CBK) cites security and lack of transparency as some of the main reasons for ‘blacklisting’ cryptocurrencies.
In a circular sent to all banks, the CBK governor, Patrick Njoroge warned Kenyans against dealing in cryptocurrencies. The governor considers that cryptocurrencies are risky in the sense that they are anonymous and do not conform to any form of centralized oversight. This, he claims, makes them suitable tools for terrorist financing and money laundering.
So far, Mr. Njoroge has issued a guidance note on money laundering policies. It stipulates, among other things, that all commercial banks must appoint officers who will be specifically committed to curbing money laundering and activities related to the financing of terrorism.
Mr. Njoroge is quick to note that he welcomes innovation and will be supportive of positive use cases for cryptocurrencies. However, he told MPs, in a special sitting that some emerging technologies carry with it huge risks that can be detrimental to the financial sector.
This is not, the first time a warning of this kind has been given by the CBK. In 2015, consumer protection concerns led to the issuance of a warning notice by the CBK against cryptocurrencies like Bitcoin.