Cryptocurrency industry has broken into Kenyan market and early grabbers are having a field day harvest.
Speaking in Nairobi this week, Florence Githinji, the regional marketing manager for Yellow Card in East Africa, stated that there is still the untapped potential of Cryptocurrencies to revolutionise financial transactions, particularly cross-border payments and investments.
“Many people do not even know how to get started. If you want to send money to someone in Nigeria or get paid for remote work from the US, crypto offers an alternative. Yet most people remain unaware of these possibilities.
“There is limited awareness in terms of the options that are not your banks or your mobile money providers,” Githinji said.
This evolution, she explained, is fuelled by high mobile penetration in the country, a youthful population, and widespread internet access, which collectively drive innovation in the financial technology space.
“Kenya’s Crypto space is growing very fast and evolving just as rapidly, a few years ago, Bitcoin dominated the market and conversations. But now in 2024, Stablecoins are taking the lead, showcasing how quickly the ecosystem can change,” said Githinji.
Traditional banking systems, she said, often exclude large segments of the population, especially those without a stable income or access to formal employment.
Ms Githinji acknowledged that early scams had tarnished the reputation of Cryptocurrency, making people sceptical, a trust deficit that pushed people away from the crypto space.
“Many people hear horror stories of individuals losing money and immediately label crypto a scam. It’s a tough perception to change,” she said.
Last year, the Central Bank of Kenya (CBK) indicated caution towards Cryptocurrencies, citing global market instability as a major concern.
In March last year, two major US banks- Silicon Valley Bank and Signature Bank, collapsed amplifying fears about the volatility of crypto assets.
Signature Bank, which had significant Crypto deposits, faced fallout from the collapse of the FTX exchange.
The incidents had ripple effects globally, including in the country. The CBK shelved plans to develop a Central Bank Digital Currency (CBDC), stating that while digital currencies could enhance financial stability and ease cross-border money transfers, the risks outweighed the benefits.“Recent instability in the global crypto assets market has amplified concerns and the need for a careful review of the innovation and technology risks,” the CBK stated.
Githinji acknowledged that Crypto investments come with risks and require informed decision-making.
The lack of clear regulations in the country has also been a stumbling block for the crypto industry. Githinji acknowledged that the government stance significantly influences public perception.
Although Kenya has taken steps to regulate the sector, with the digital asset tax introduced in the Finance Bill 2023 already in place, the absence of comprehensive guidelines leaves room for skepticism.
The Kenya Revenue Authority (KRA) has intensified efforts to tax digital coin traders, targeting Sh. 60 billion in collections from the sector.
Globally, the Crypto industry is at a crossroads. In the US, President elect Donald Trump has pledged to support the sector with executive orders aimed at mainstreaming Cryptocurrencies.
A report by the United Nations Conference on Trade and Development (UNCTAD) indicates that 4.2 million Kenyans hold Cryptocurrencies, the largest population in Africa.
