Cryptocurrency exchange platform Coinbase is making a grassroots push into the Kenyan technology and payments ecosystem by supporting developers and eyeing co-operation with M-Pesa even as government regulation remains uncertain.
The team of executives from Coinbase visited Nairobi this month, hosting meetings and events with developers that are building projects on its technology platform called Base.
The group from Coinbase, which is listed in New York with a market value of around $73 billion, also met with specialists from M-Pesa to discuss incorporating blockchain technology with the ubiquitous Kenyan mobile payment system.
Kenya is a hub for financial technology innovation and one of Coinbase’s key focus areas globally for Base, its technology platform on which developers build their own applications such as payments tools.
Base is a blockchain network connected to Etherum, the second-largest cryptocurrency after Bitcoin.
Blockchains are decentralised networks that allow interactions, such as transactions, in a way that is typically cheaper, more secure and more transparent than conventional payment networks operated by a single entity.
One application for blockchain networks is sending money across borders in the form of cryptocurrency relatively cheaply compared to conventional payment services.
“The adoption of crypto is happening in East Africa and across the African continent faster than basically anywhere else in the world. We’re seeing the most excitement and adoption in Kenya and then Nigeria,” Jesse Pollak, the creator of Base and a senior executive at Coinbase, said in an interview.
Coinbase hosted an event in Westlands for hundreds of Kenyan developers that are building on Base. At the event, Mr Pollak announced support for a domestically-produced Kenya shilling stablecoin, a type of cryptocurrency that is pegged to a national currency.
Mr Pollak said that Coinbase was making other efforts to support the education and growth of Kenyan developers working in the crypto sphere, including meeting with universities to discuss introducing blockchain technology education into curriculums.
“The Nairobi development community is large and welcoming—we’re on the right path, but we need more to grow,” said Tiffany Gathoni, a software developer who attended the event. “We have to catch up to Nigeria… government support or facilitation of funding for startups would be a big deal.”
Coinbase’s support for local developers working on its Base platform marks a new footprint for the company in Kenya. Coinbase has served Kenyans via its international entities since at least 2019, and had a limited on-the-ground presence through local contractors, which it wound down in 2022 and 2023 amid a lack of regulatory clarity.
Uncertainty over crypto regulation has long plagued the industry, with Coinbase itself locked in a legal battle with the US Securities and Exchange Commission in a case where the core issue is whether some cryptocurrencies should be classified as securities.
In Kenya, crypto has been on the government’s radar for years, but little has been done to incorporate digital assets into financial regulation.
The Central Bank of Kenya warned banks in 2015 over dealing with cryptocurrencies, but has not yet issued firm rules, while much of the spotlight has fallen on the Kenya Revenue Authority’s surveillance of digital assets being used for tax evasion.
However, Mr Pollak said the Kenyan government has shown increasing willingness to “lean in” to crypto, and he felt there was a positive reception from the government over Base’s visit to Nairobi.
The crypto executive added that interest in crypto has also come from the private sector, with Coinbase in ongoing discussions with Safaricom about the prospect of innovating M-Pesa with blockchain technology.
“We welcome regulatory clarity and are pleased to see progress in this space in Kenya. I'm really optimistic about the opportunity for [blockchain] innovation to drive meaningful change in communities across the region, and equally for great applications for the world to be built by Kenyan entrepreneurs,” said Mr Pollak.
