Local Currency and Cryptocurrency in Kenya.

Cryptocurrency and blockchain technology is cheaper and neater in matters of office organization.

It is safe since episodes of hacking, stealing of bitcoin, and even bankruptcy of exchanges and wallet providers have occurred, but less frequently over time. Traders are safe from cyber security.

Cryptocurrencies can be very volatile. It is a very speculative investment. And it’s not guaranteed by a central bank or backed by a government. Investors are totally on their own.

It’s cheaper than many conventional options for remittances or money transfers and can be very convenient for instance for smartphone payments. The currencies comes with simplicity of transaction.

To the extent that transactions are settled quickly, volatility is less of a problem. There are many exchanges that sell and buy cryptocurrency. There are also a growing number of physical automated teller machines, or ATMs, that will convert hard currency into bitcoin.

The most practical way is to download a digital wallet to a smartphone. As with a real wallet, these are good for small purchases. Storing large amounts is more complex.

The Capital Market Act defines the term security and identifies some types of securities such as: shares, debt instruments, rights options or relating to other securities, futures relating to assets or property, depository receipts, asset backed securities.

The definition of securities also includes interests, rights or property commonly known as securities .

Further the CM Act provides that securities include any other instrument prescribed by the CMA to be a security.

This allows the CMA to prescribe cryptocurrencies as securities. The CMA has yet to designate cryptocurrencies as securities. We expect increased financial innovation in the fintech space and an increased willingness by regulators to engage with blockchain ledger technology.

The Government thorough the Ministry of ICT is showing an increased appetite to embrace the use of distributed ledgers for record keeping. These efforts are likely to intensify and may culminate in the use of distributed ledger technology in government registries.

The initiative to use fintech to roll out financial services to the mass market is likely to continue and focus on non-bank services such as insurance and investments.

The Kenyan fintech space is one of the most vibrant in the region, most innovations that have been focused on are as follows. Mobile money e.g. M-Pesa, T-Kash, Arirtel Money, etc. Lending platforms e.g. Branch, Tala, Malaika. Savings e.g. M-Shawari. Mobile payments e.g. Mpesa Buy Goods/ Paybill. Crowdfunding e.g. M-Changa. Securities e.g. treasury bond purchase through M-Akiba.

Regulation is largely dependent on the nature of the fintech innovation. Primarily, fintech is regulated under the following laws. The National Payments Systems Act administered by the Central Bank of Kenya (CBK), The Capital Markets Act administered by the Capital Markets Authority (CMA) and The Kenya Information and Communication Act administered by the Communications Authority.

Local currencies is less secure than digital currencies due to cyber attacks that often occur during transaction. It is quite different with cryptocurrency theft.  This happens mostly during authentication when one is required to enter their secret keys to shop online or withdraw cash from ATMs.

While in cryptocurrency you are on your own criteria but what makes is more secure since you don’t have to enter your credentials to transaction and incase the system detects theft the transaction is cancelled immediately.

Although acceptance is still limited but is increasing. A few online retailers accept the currencies mostly bitcoins, as do some brick and mortar stores.

Potential applications of purpose-built private blockchains to improve transparency through compliance and auditing, in contrast to Bitcoin’s reputation as secretive and anonymous