The rise of digital currencies has sparked excitement and controversy around the world, including Kenya. While cryptocurrency has gained momentum in recent years, it poses harm to consumers, investors and the broader economy. As government works on regulations, experts urge caution and awareness of the risks involved.
In Kenya where millions of people have limited access to traditional financial service and face economic hardships exacerbated by the Covid-19 pandemic, the allure of quick and easy profits from crypto trading can be particularly appealing.
However speculative behaviour can lead to a bubble, where prices of cryptocurrencies are inflated beyond the real value, and eventually burst causing losses to investors and instability of the financial system.
Moreover, the crypto market is largely unregulated and prone to fraud, scams and cyber-attacks. Many Kenyans have fallen victim to ponzi schemes and pyramid schemes.
The Central Bank of Kenya has not authorised cryptocurrency as legal tenders, and has cautioned the public against transacting in digital currencies citing their unregulated nature and potential risks.
The hype around cryptocurrency should not blind Kenyans to its potential dangers. The relevant regulatory bodies should balance the need for innovation and inclusion with consumer protection and stability, engaging in a constructive dialogue with all the stakeholders and adoptive evidence-based policies that promote a safe and sustainable development of the crypto industry.
Rongo University
