CBK warns against use of Bitcoin, other virtual currencies in Kenya


Some of Bitcoin enthusiast Mike Caldwell’s coins in this file photo illustration at his office in Sandy, Utah, September 17, 2013. Photo/REUTERS

The CBK has warned Kenyans against using the Bitcoin and other virtual currencies as they are illegal in the country given the risks associated with them.

Virtual currencies such as Bitcoin are not legal tender in Kenya therefore no protection exists in the event that the platform that exchanges or holds them fails or goes out of business,” the CBK said.

“Bitcoin is a form of unregulated digital currency that is not issued or guaranteed by any government or Central Bank,” it added in a statement.

The CBK further warned that virtual currencies are associated with criminal activities and put consumers at high risk of losing money without legal redress.

“Transactions in virtual currencies such as Bitcoin are largely untraceable and anonymous therefore susceptible to abuse by criminals in money laundering and financing terrorism.”

“CBK reiterates that Bitcoin and similar products are not legal tender nor are they regulated in Kenya. The public should therefore desist from transacting in Bitcoin and similar products.”

The stakes are high in the hunt for Satoshi Nakamoto, the person or people behind bitcoin, not just for the journalist who gets it right first, but also for the cryptocurrency itself.

Unlike traditional currency, bitcoins are not distributed by a central bank or backed by physical assets such as gold, but are “mined” using computers to calculate increasingly complex algorithmic formulas.

An Australian entrepreneur and academic, Craig Steven Wright, is the latest candidate, outed in articles by Wired magazine and technology news website Gizmodo hours before his home and office in Sydney were searched by police.

Both articles said investigations based on leaked emails, documents and web archives pointed strongly to Wright being “Nakamoto”. “Either Wright invented bitcoin, or he’s a brilliant hoaxer who very badly wants us to believe he did,” said Wired.

Unmasking the “real” Nakamoto would be significant both for the future development of bitcoin and, potentially, the currency’s market value.