The ongoing meltdown in the cryptocurrency industry, which could push an estimated four million Kenyans into losses, calls for an urgent rethink in terms of regulation.
From the onset, cryptocurrency has been controversial even in the developed world with many regulators struggling to devise ways of regulating the sector.
The current crush in the market, which has seen investors lose their money, calls for rules to protect users and regularise the industry. Cryptocurrencies are unregulated in many countries and their legal status is unclear, meaning there is no safety net and little recourse if you lose funds.
We believe that regulation could also bring stability to the notoriously volatile market, which has been characterised by wild price swings.
It has been the position of the Central Bank of Kenya (CBK) that the trade is risky and Kenyans should not engage in it.
However, the truth is that regulations will have to come at some point. Kenya should not delay the regulations as some people already view it as a source of income, joining with no prior knowledge of how the market works.
Kenya can borrow some lessons from countries in the developed world that are currently working on regulating the sector.
Already, some countries like the United States and France are licensing crypto exchanges such as Binance and Coinbase to protect investors and prevent the flow of illicit cash.
The US senate is already deliberating on possible ways of regulating cryptos as it takes root across the world.
As a country, we cannot bury our heads in the sand as millions expose themselves to losses. Kenya is among the top dealers in peer-to-peer cryptocurrency platforms, which allows traders to transact directly with one another without the need for a centralised third party to facilitate the transactions.
What this means is that transactions that could run into billions are conducted without the knowledge of regulators. This raises the risks of illicit money flows into the country besides the heavy losses that investors, especially unemployed youth, stand to lose.
We cannot afford to operate as if cryptocurrencies are a passing cloud.