Kenya’s monetary policy stance on cryptocurrency remains firm, said the country’s central bank’s chief Dr. Patrick Njoroge, who cast a cloud over prospects for Facebook’s digital currency Libra.
Speaking at the Afro-Asia fintech festival in Nairobi, Dr. Njoroge said that Libra raises many serious questions and that Kenya is “miles away” from adopting cryptocurrencies as a legal tender.
“We are still miles away from having solutions to those things (cryptocurrency). But I know there’s a lot of interest particularly with the new product that Facebook has recently announced” he said.
“That actually is miles away from any regulation, including the Fed (central bank of the US) which just recently said (Facebook’s cryptocurrency project) needs to be paused. The risks are phenomenal and we need to understand the risks better before making a statement.”
Facebook’s plan to launch a digital coin, Libra has met a wave of opposition from central banks and critics around the globe, including US President Donald Trump. The concern is that the social media giant’s digital coin might open avenues for illicit activities such as money laundering, cyber crime, and tax evasion.
But there are also deeper concerns that the powers of big tech corporation increasingly encroach on areas belonging to governments, like issuing currency. Central banks around the world insist that if Facebook wants to launch the currency, it needs a banking license, which would subject it to the strict regulations.
Moreover, Libra is yet to convince financial regulators that it has high privacy standards that will ensure the security of transactions and user data. Facebook, however, has maintained that the currency is independently-managed and that Libra Association will only share customer data with Facebook and third parties if it has consent, or in “limited cases”, where necessary.
Regulation of blockchain and cryptocurrency
Dr. Njoroge also revealed that Kenya has been working with global central banks to “deal with regulations of cryptocurrency”. It remains to be seen how fast the financial regulator fast tracks this process even as blockchain startups in Kenya continue to solicit investments and traditional businesses implement blockchain solutions.
The Afro-Asia fintech festival, first of its kind globally, is a flagship project of the Central Bank of Kenya and Monetary Authority of Singapore (MA).