June 7, 2023

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.

Chief Kenyan Financial Regulatorpublished the 2022 Banking Industry Oversight Annual Report, which states that in recent years, central bank digital currencies have become increasingly popular in different countries. Reason: Users want 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 country is notthe need to launch a digital Kenyan shilling. The regulator said that shortcomings in the field of payments can be solved thanks to innovations in the existing payment system. Therefore, the implementation of CBDC should not be a priority.

At the same time, many citizens of the country showgreat interest in crypto assets, trying to capitalize 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 attitudes 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 give the state itself, as well as finding a balance between the risks and opportunities of cryptocurrencies.

In 2020 and 2021, Kenya ranked first inworld in terms of the volume of peer-to-peer transactions, and last year 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.

Recall that recently the government of Kenya proposed to introduce an additional tax of 3% for the transfer of digital assets, which caused a mixed reaction from the local crypto community.