Emerging Regulatory Issues on Digital Currencies in Kenya

Digital currencies

 
A couple of days ago I perused the Kenyan NATIONAL PAYMENT SYSTEM ACT (No. 39 of 2011)THE NATIONAL PAYMENT SYSTEM REGULATIONS, 2014 (pdf). My interest was the legal stance on issuance of P2P exchangeable assets, such as loyalty reward points in Kenya, on the bitcoin blockchain – a decentralized network. At Umati Blockchain Ltd, we are exploring using the coloured coins protocol (for now)  for issuing freely exchangeable loyalty points, with all the ease, nifty features and security of the bitcoin blockchain.

It seems, to me, digital currencies such as bonga points, and cryptocurrencies such as bitcoin, fall in a gray area. They do not fit the strict definition of E-money under Kenyan law. Perhaps why, late last year, the Central bank of Kenya admitted via a public notice ‘Virtual currencies such as Bitcoin are forms of un-regulated digital currency not issued or guaranteed by any government or central bank.’ I subsequently wrote a rebuttal to this notice.

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My takeaways from E-payments panel at Connected 2016

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I was delighted to sit on an electronic payments and the future of cash panel at the connected 2016 conference. As co-founder and Chief Analyst at Umati Blockchain ltd., my invitation scope was Bitcoin, virtual currencies and the blockchain. It was great getting feedback from the audience, on what is wrong with Kenya’s cashless transition. A healthy nuance of talking points emerged from the mixed backgrounds of the panelists.

Here is a 30 min edited video of the panel session

These were my takeaways

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Why I am bullish on Bitcoin and why you should be too

Bitcoin is yet to resonate with mainstream investors and the average (wo)man as a neo-asset class. I think if you have heard about bitcoin, you would be foolish not to dip a toe. Bitcoin, is a great proxy investment at potentially, the greatest innovations of our age, the internet of money.

Bitcoin Price 2

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Uganda’s Mobile Money Censorship is a Testament to Bitcoin

Money as a form of Communication

The censorship of mobile money in Uganda during its Presidential and parliamentary elections, is a testament to the need for apolitical digital currencies like bitcoin. Money, just like media is a means of communication. Just as social media censorship riles up freedom activists, so should forms of censorship on money.

On election day, Ugandans woke up to no social media and no mobile money services. Nearly 20 million mobile money users were unable to access the service for at least two-and-half days.

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How Kenyan Banks are fighting off Mpesa

Once upon a time, Kenyan Banks lost to Mpesa. It’s been 7 years, and they have since made a number of strategic moves to win back the market

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Why we should Slay Mpesa, and save the town

article2Kenya and east africa’s mobile money systems are overly reliant on Telco’s networks and SIM modules. The status quo is detrimental to Banks, Non-banking financial institutions and a whole host of digital token value services e.g sports betting and prepaid electricity tokens.

Telcos, now Mobile Money Operators, are a Banks wet dream. Peer to peer money transfers in Kenya almost always route through a mobile network operator’s SMS, SIM card and USSD channels; they are the gatekeepers.
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Kenya clamps down on Cash

From my Twitter timeline, I can tell there is a lot written about the ongoing war on cash; an international war on physical paper and coins. Today, it was much closer to home.

Central Bank’s new tough rules to monitor large cash transactions was an article from the Standard Digital dated January 28, 2016 [Read more…]

How much it costs to send money btwn Kenya & Tanzania via Mpesa

A couple of weeks ago Safaricom and Vodacom announced a cross border money transfer service on the Tanzania – Kenya corridor. Both subsidiaries of UK-based Vodafone Group, are leaders in their respective home markets. Through this partnership, registered Mpesa and Vodacom users can send and receive money in either direction.

With assistance from my friend (Ofio) in Tanzania’s capital, Dar, I set to out to test this service and found out:

It costs 6.24% in total to send 4,000 TZs to Kenya. A 4.74% forex margin spread is applied plus 1.5% sending charges . The same applies for TZ to Kenya bound transactions from Vodacom to Mpesa.

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5 more things they didn’t tell you about m pesa

Cover Mpesa myths

Despite a fair number of attempts at elaborately fleshing out Mpesa for readers, in this article I outline 5 more things left out  by:

Claudia McKay & Rafe Mazer did an article for the CGAP titles “10 Myths About Mpesa: 2014 Update” – a follow up to a previous article by Claire Alexandre “10 things you thought you knew about Mpesa”. In both of these articles, 5 crucial things were left out that you should know about!

Mpesa is used on a contractual basis from Vodafone Group.

M-pesa is not a Kenyan invention, by any stretch. M-pesa is owned by Vodafone Group, was partly funded by the UK DFID, conceptualized by Nick Hughes – an executive at Vodafone – in 2003 and finally project managed by Susan Lonie – an m-commerce expert – from pilot to commercial operation.

A confluence of factors – fashionable sustainable development, microcredit prospects in East Africa and a willing mobile network operator, Safaricom – meant that Kenya was a hotbed for testing a pilot. [Read more…]

10 differences between Mpesa and Bitcoin

Bitcoin vs Mpesa featured image

Centralized – Decentralized

Mpesa is a centralized electronic money system owned by Vodafone. All transactions are settled on a centralized ledger on a central server.

Bitcoin is a decentralized electronic value transfer network owned by no one. All transactions occur on decentralized ledger on a distributed network.

Pegged to local fiat on 1:1 ratio – Free floating market price

KES 200 cash for MPesa KES 200 on a feature phone

Digital currency Mpesa is issued money, fully (100%) backed by liquid reserves on a 1:1 ratio. For every Mpesa unit in mobile wallets, there is matching fiat held in trust. The value is fixed.

Bitcoin is NOT backed by anything and derives its price from a free floating market exchange. Its value changes with market sentiments.

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