Capital Markets

CBK warns it won’t be liable for digital currency losses


Central Bank of Kenya governor Patrick Njoroge. FILE PHOTO | NMG

The Central Bank of Kenya (CBK) has said it will not be held liable for losses incurred by consumers using digital currencies to settle transactions since the virtual currency is not a legal tender in the country.

“I have been quite clear about our views on bitcoin and the bitcoin-like items. From our perspective that is something that we cannot support,” said CBK governor Patrick Njoroge on Tuesday.

“Our nouveau riche (people who have recently acquired wealth) is so excited about the bitcoin thing and they are putting their money there. It is dangerous.”

Bitcoin traders in the country have grown bolder, meeting regularly and even opening two Nairobi-based exchanges of the cryptocurrencies.

Citibank analysts recently warned that Kenyans have accumulated holdings of bitcoin estimated at more than Sh163 billion, which could cause widespread disruption to the economy were the non-official currency to collapse.

READ: Citibank warns over risk of Kenya bitcoins

The Citi study revealed a rising popularity of the virtual currency despite persistent warnings by regulators, citing the lack of legal backing.

Citi report ranked Kenya among countries with the largest bitcoin holdings. The survey estimated Kenya bitcoin holdings are about 2.3 per cent of the gross domestic product (GDP).

Kenya’s GDP as of 2016 stood at Sh7.1 trillion, hence the holdings stand at about Sh163.3 billion or half of the construction budget of the Mombasa-Nairobi standard gauge railway (SGR).