Cryptocurrencies are risky but not illegal

In Summary

• MPs are investigating the cryptocurrency provider WorldCoin which scana customer eyeballs

• The CBK Governor told MPs that cryptocurrencies are not illegal in the present regulatory environment

Virtual currencies such as Bitcoins are not legal tender in Kenya
Virtual currencies such as Bitcoins are not legal tender in Kenya

Central Bank Governor Kamau Thugge has told MPs investigating WorldCoin that cryptocurrency is not illegal.

The apparent crime of WorldCoin was to seek biometric identification of customers by scanning their eyeballs – a security measure that was an apparent invasion of privacy.

But, as Thugge pointed out, purchasing cryptocurrency is not illegal even though the CBK has issued multiple warnings that it is a very risky asset class.

A lot of things can go wrong with cryptocurrency. The simplest problem is you cannot recover your money if you lose your password. Multiple crypto exchanges have gone bankrupt. Crypto is also popular with criminals so users are always at risk of being defrauded.

Keeping cryptocurrency is essentially like gambling – you can make money but you can also lose money.

However blockchain, the technology behind crypto, is probably the future of commercial transactions as it is private, secure and verifiable. This is why the CBK itself is thinking of introducing a fiat blockchain currency.

So the CBK, MPs and the Data Commissioner should not outlaw cryptocurrencies but should keep warning Kenyans that cryptocurrencies are a risky place to keep your savings.

Quote of the day: "Politicians are the same all over. They promise to build bridges even when there are no rivers."

Nikita Khrushchev
He became first secretary of the Communist Party on September 7, 1953

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