Kenya’s governor of the central bank, Patrick Njoroge, acknowledged that he was under external pressure from cryptocurrency enthusiasts to convert the nation’s reserves into Bitcoin (BTC).
In a meeting with lawmakers on 19 September, Njoroge described the plan as “crazy,” adding that it would be risky to convert the assets into Bitcoin given the volatile nature of the digital commodity.
Additionally, he implied that legislators may be under pressure to sway the legislative process in favor of the adoption of cryptocurrencies.
Pressure to push crypto
Interestingly, the governor said he was willing to do time in prison if the nation adopted Bitcoin during his administration. He stated,
“I do know you’re under a lot of pressure from some of these people that are pushing these things [cryptocurrencies] because for them it is good. I can assure you I have a lot of people that have been pushing me to put our reserves in Bitcoin. <…> I would have been out of my mind with that sort of craziness.”
Njoroge added that the nation could decide to adopt cryptocurrencies only if they provide a solution to a specific issue. To get away from the “hype” surrounding digital assets, he called for a review of the bitcoin market.
What issue in our economy are they addressing, he questioned? He further stated,
“The answer is no, they are not superior vehicles for, say, payments or other activities. In terms of whatever the issues are, are they better? The answer is no, its security does not outweigh that of your bank account. We perceive it as sort of something that is perhaps overhyped, but we do need to properly examine it to determine whether it would solve a certain problem or not.”
Need for regulations
Notably, the Central Bank of Kenya has already cautioned residents against using cryptocurrencies, citing the associated risks. To control the industry, there aren’t any extensive regulations, nevertheless.
In this instance, the organization has mostly sent circulars to regional banks advising them to exercise caution when interacting with cryptocurrencies or businesses that deal in digital assets.
A recent study showing that a record four million Kenyan crypto investors lost money as a result of the continuing sell-off in the market for digital assets brought attention to the severity of the threats.
Despite this, Kenya is booming with crypto activities. While Nigeria is Paxful’s largest market globally, Kenya is currently the second-largest market in Africa and the fifth-largest market globally.
Kenya experienced P2P volumes of over $200 million in 2021 and over $125 million in the first half of 2022. Paxful continued, “We predict a 25% increase in trade volume in Kenya for 2022.”
In response to the substantial rise observed in Ghana and Kenya, Paxful stated,
“There are more and more African users remitting money over the years — the total remittance user base (users trading in multiple currencies) on Paxful grew by nearly 140% in Kenya and over 115% in Ghana in 2021. In 2021, Ghana experienced a yearly growth of 95% in trade volume.”