UN Issues Advisory to Kenya After Ranking in Cryptocurrency Ownership

Undated Photo of the Central Bank of Kenya in Nairobi
A photo of the Central Bank of Kenya in Nairobi.
Photo
CBK

The United Nations has advised Kenya to ban advertisements of cryptocurrency businesses on social media after the country was ranked fifth in digital currency ownership in the world.

In the report titled All That Glitters Is Not Gold released by the United Nations Conference on Trade and Development (UNCTAD), cryptocurrency business in the country grew astronomically during the pandemic.

UNCTAD explained that the ban on advertisements was one of the ways that could be used to regulate the industry that has become attractive to many people across the globe, arguing that the business model can lead to major losses.

Cryptocurrency scams on the rise in the country
Cryptocurrency scams on the rise in the country
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"This new type of virtual, and often disguised, advertisement requires policymakers to expand the scope of regulation beyond traditional media. 

"This is an urgent need in terms of consumer protection in countries with low levels of financial literacy, as even limited exposure to cryptocurrencies may lead to significant losses," read the UNCTAD report in part.

Further, UNCTAD urged the government to introduce mandatory registration of cryptocurrency exchanges so as to protect Kenyans from rogue dealers who swindle them.

In previous years, Kenyans have lost millions of shillings through unscrupulous deals on some cryptocurrency platforms and this has been attributed to the lack of guidelines and regulations in the sector.

UNCTAD also stated that the move will help the government tax digital currency users for transactions carried out.

"Creating a public payment system to serve as a public good, such as a central bank digital currency.

"In the light of the regulatory and technological complexity of central bank digital currencies and the urgent need to provide safe, reliable and affordable payment systems, authorities could also examine other possibilities, including fast retail payment systems," UNCTAD advised.

In February, the Central Bank of Kenya (CBK) released a framework geared towards the introduction of digital currency given the increasing global trend on its use.

In the UN ranking, Kenya beat developed countries such as the United States, United Kingdom, Korea and Australia in crypto trading.

CBK Governor Patrick Njoroge speaking during a press conference on March 30, 2021
CBK Governor Patrick Njoroge speaking during a press conference on March 30, 2021
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