Kenya’s first bitcoin ATM was recently installed in Westlands, Nairobi in 2018. PHOTO | COURTESY OF DAVID GITONGA
Africa’s financial sector is still cautious about adopting
cryptocurrencies with players in the industry warning that they may
become a window for mass financial fraud.
“Cryptocurrencies
started out as really fantastic ideas, but as time went on, they now
look like strong indicators of illicit flows. Even as we look at the
potential, we have to look at the risks,” the Central Bank of Kenya
Governor Dr Patrick Njoroge said on Monday at the ongoing Africa CEO
Forum in Kigali.
Regulators are concerned that with no guidelines the digital currencies could have an impact on financial stability.
“There
is no shared regulation for cryptocurrencies so far. It would be very
dangerous for a bank to be part of any system that is not regulated,”
warned Mr Alexandre Maymat, head of Africa, Asia Mediterranean Basin
& Overseas at Societe Generale, a French-owned investment bank.
Cryptocurrencies
are a form of digital currencies backed by the revolutionary blockchain
technology — a digital distributed ledger system for recording
transactions — that looks to disrupt industries and improve service
delivery.
Despite warning from regulators, the virtual
currencies continue to gain traction. There are currently more than
2,000 cryptocurrencies in the world with a market capitalisation of
about $140 billion. Bitcoin is the best known digital currency having
been the first mover.
While financial sector captains acknowledge the potential of the
blockchain technology they remain sceptical of the cryptocurrencies
warning that they are prone to theft and fraud.
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