Safaricom CEO Bob Collymore has said the telecommunications giant will not agree to have bitcoin-related transactions on its M-Pesa system unless the virtual currency is authorised by the banking sector regulator.
Mr Collymore says the bitcon, a digital currency used online, would expose M-Pesa to Central Bank of Kenya’s (CBK) money laundering penalties.
The Safaricom boss said in an interview that the restriction is to assist the police and CBK’s fight against money laundering and the possibility of being used to finance terrorism.
“We’re in a very precarious position as a successful mobile money transfer system. We cannot afford to compromise it (M-Pesa) or any other mobile money system and we have to work with CBK, which is clear in its regulations,” said Mr Collymore.
Although not outlawed, the CBK last week issued a statement warning that holders of the bitcoin currency did not have any legal recourse if they lost their money.
The cryptic currency is not backed by any central bank or assets in the world and its value fluctuates wildly depending on demand and supply by traders online.
CBK said in the notice last week that bitcoins are not legal tender in Kenya.
BitPesa Ltd, a Nairobi-headquartered bitcoin trading platform, is fighting in court to restore its trading links with Lipisha, which is a licensed M-Pesa transactions provider.
Before BitPesa’s connection with Lipisha was severed, users could convert bitcoin into Kenya shillings and use it to make retail payments or remittances via M-Pesa.
“Risks such as “being untraceable and anonymous,” make them (bitcoins) susceptible to abuse by criminals in money laundering and financing of terrorism. Consumers may also lose their money without having any legal redress in the event that these exchanges collapse or close business,” warned CBK.
BitPesa, however, insists that its virtual currency business is “safe and sound”.
“CBK has currently chosen not to regulate bitcoin. Unregulated business is not illegal business and BitPesa will continue to operate and maintain our headquarters in Kenya. BitPesa is licensed, however, by the UK’s Financial Conduct Authority as an Authorised Payment Institution,” said the firm in a notice.
China, France, the European Central Bank among others have warned citizens against the appeal of virtual currencies that are neither regulated nor illegal in countries such as the US, Germany and the UK.
While liberal regulators say the bitcoin innovation should be used as a currency, conservatives maintain that it not only poses a risk of money laundering but also drug trafficking and bribery in the public and private sectors.
“This is not just a Safaricom matter but as a country we need to act responsibly and wait for the court to decide,” said Mr Collymore.