Parliament has given Treasury secretary Henry Rotich two weeks to decide whether cryptocurrencies will become legal tender in the country.
The Finance and National Planning Committee took Mr Rotich to task to explain why trade in bitcoins and other virtual currencies was taking place in the country. The committee sought to know why the Treasury and the Central Bank of Kenya (CBK) allowed people to venture into the unregulated cryptocurrency space without being licensed to operate and taxed.
“We are surprised to hear that even the CBK is not aware that there is a lounge at Kenyatta University, an ATM in town, and a hotel in Nyeri which trade in bitcoins. There is a bigger problem in Kenya since people are trading billions in virtual space yet the Treasury has not licensed and taxed it like trade in M-Pesa and bank transactions,” Joseph Limo, who chairs the committee, said.
Cryptocurrencies, such as bitcoins, are digital currencies that are not issued by a central government or State authority.
They are issued electronically by private entities who recruit users to use the currency among themselves. In December 2015, the CBK issued a notice warning the public against using virtual currencies.
On Tuesday, Mr Rotich dismissed cryptocurrencies saying the fall of the bitcoin from a peak of $19,300 in February 2017 to $8,500 in February 2018 demonstrated its instability.
Mr Rotich told MPs that like any other developing technology, the government was yet to determine whether or not trade in cryptocurrencies will be allowed to thrive. He said discussions were ongoing globally to regulate the trade in virtual currency to minimise risks including money laundering.
“I am not aware of people operating locally. But I will endeavour to find out whether we have local exchangers. The issue of cryptocurrencies is evolving and we can take a position as a country. This is a delicate balance between supporting innovation and killing it,” Mr Rotich said.