CMA locks cryptocurrencies out of innovation hub

Cryptocurrency developers have been locked out of a Capital Markets Authority (CMA) fintech incubating platform set for official launch in May, which at least 70 firms have expressed interest in joining.

CMA chief executive officer Paul Muthaura Thursday said the regulator has concluded the public exposure phase of the regulations governing the platform, known as a regulatory sandbox, and will in April issue the final policy guidance note to anchor the regulations in law before going live in May.

On Thursday he met the interested firms for a validation exercise of the public views of the new regulations.

Although the CMA did not name the companies, it said that majority are in the payments space. Others are crowdfunding platforms in the health and real estate (Reits) sectors, as well as firms that do digital fund management.

“In the validation we have 70 companies, some from outside Kenya. Blockchain firms will be considered so long as they are not dealing with cryptocurrencies since the CMA’s mandate does not extend to currency,” said Mr Muthaura.

“The CMA regulatory sandbox can only serve financial innovations that are directly within the regulatory perimeter of the CMA.”

CMA and Central Bank of Kenya have gone on record warning Kenyans against trading in cryptocurrencies, saying they have no regulatory oversight and therefore in case of losses investors would have no recourse.

Mr Muthaura Thursday warned such unregulated technologies potentially bring up new prudential risks that can destabilise the market and put off retail investors for many years to if not properly managed.