March 29, 2024

Central Bank of Kenya refuses to launch a digital shilling

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Central Bank of Kenya refuses to launch a digital shilling

The Central Bank of Kenya said that in the short term the country does not need to implement a state-owned stablecoin. Even taking into account the popularity of crypto assets among the local population.

Kenya's chief financial regulatorreleased its 2022 Annual Banking Supervision Report, which states that central bank digital currencies have become increasingly popular in various countries in recent years. Reason: Users strive to make fast payments with low fees. In addition, they are attracted by the decentralization of finance and privacy.

However, the Central Bank of Kenya believes that now the countrythere is no need to launch a digital Kenyan shilling. The regulator said that shortcomings in the payment field can be resolved through innovation in the existing payment system. Therefore, implementing a CBDC should not be a priority.

At the same time many citizens of the countryare showing great interest in crypto assets, trying to make money on their high volatility. Therefore, the Central Bank of Kenya decided to warn local residents that digital assets are associated with various risks, including hacker attacks and the use of crypto assets for illegal purposes. The Bank of Kenya is monitoring the attitude of other central banks towards Bitcoin and crypto assets in general. Now the Central Bank of Kenya is not ready to work out the regulation of the crypto industry, but its approach will be based on three principles: protecting the interests of users, what economic value this can provide to the state itself, and also finding a balance between the risks and opportunities of cryptocurrencies.

In 2020 and 2021, Kenya ranked firstplace in the world in terms of the volume of peer-to-peer transactions, and last year it ranked 19th among countries in which citizens actively use cryptocurrencies. However, the Central Bank of Kenya announced the need to conduct a new survey to find out its level of involvement in the crypto sector of the economy. Based on the data obtained, the central bank and other regulators will be able to formulate a clearer policy for regulating the industry. 

Let us recall that the Kenyan government recently proposed introducing an additional 3% tax on the transfer of digital assets, which caused a mixed reaction from the local crypto community.