CBK snubs bitcoins as new notes beckon

CBK governor and Monetary Policy Committee chairman Patrick Njoroge. photo | salaton njau
CBK governor and Monetary Policy Committee chairman Patrick Njoroge. photo | salaton njau 

Cryptocurrency is still off the menu for Kenya, a country known as a financial inclusion hub with one of the best case of mobile money use, as it moves to replace its physical currency with new notes by mid next year.

The country is set to get a new set of notes between May and June, according to Central Bank of Kenya (CBK) Governor Patrick Njoroge, which will not bear the portrait of past presidents.

The Constitution, which came into force in August 2010, prohibits the use of a person’s portrait on notes.

The process of phasing out the old notes and coins with new ones has, however, been delayed by court battles between the CBK and British firm De La Rue, which has previously been contracted to print the old currency.

“We are moving ahead with the production of the new generation currency. We expect to issue the new currency sometime in the second quarter of 2018,” Dr Njoroge told a press briefing in November, reiterating that the regulator had warned that trading in cryptocurrencies was a risky venture.

'Not legal tender'

In a notice dated December 15, 2015, the CBK cautioned that “Bitcoin and similar products are not legal tender” and asked the public to “desist from transacting in Bitcoin and similar products.”

This, however, has not deterred thousands of Kenyans from investing in blockchain-based currencies such as Bitcoin and Ethereum as their values rose rapidly over the last few months.

Bitcoin, which expanded faster in emerging markets this year, has since skyrocketed more than 1,300 per cent , creating a new crop of dollar millionaires.

Financial crisis

“We have seen this game before in the context of the global financial crisis and the tulip mania,” Dr Njoroge said.

“There may be a future for blockchain. We need to distinguish the products from the technology.”

This approach to cryptocurrencies is a common among many regulators across the world, who view the unregulated and volatile nature of cryptocurrencies as a big risk for the financial system.