Kenya’s tough stance on digital currencies such as bitcoin has left investors such as ICT Cabinet Secretary Joe Mucheru unable to dispose of their stakes in companies dealing in the virtual cash. Mr Mucheru in January announced that he would offload his minority shareholding in BitPesa, but the share sale coincided with the banking sector regulator’s warning to the public against use of cryptocurrencies such as bitcoin.
The Central Bank of Kenya (CBK) in a stern notice dated December 15, 2015 cautioned that “Bitcoin and similar products are not legal tender” and ordered the investing public to “desist from transacting in Bitcoin and similar products.”
The planned divestiture, meant to cure a possible conflict of interest, is now on ice as the ex-Google executive says he has not found a buyer of his shares. “Due to changes in CBK policy on digital frequencies, all bank accounts were closed and the business in Kenya effectively closed,” Mr Mucheru said in an interview with.
“I cannot find a buyer. The sale fell through,” said the Information minister who was sworn into office on December 18, 2015.
Mr Mucheru also quit the board of BitPesa where he was serving as a director immediately he was appointed to public office, raising the corporate governance bar for Kenyan public officials. The move to exit the board of the bitcoin platform and sell his shares in firms that are under the ICT ministry are in line with global best practices for public officers, said Mr Mucheru.
Bitcoin is a virtual currency whose use and value has grown exponentially since its inception in 2009 by a techie going by the pseudonym Satoshi Nakamoto.
Unlike traditional fiat currencies which partly derive their value from the faith that users put in the issuing governments, bitcoin is not created, regulated or backed by any reserve bank. BitPesa, founded in 2013, allows remittances and cash transfers through bitcoin, and the service is interlinked to mobile money platforms such as Airtel, MTN Uganda, Tigo, and M-Pesa.
The technology start-up has expanded operations beyond Kenya and is now available Uganda, Tanzania, and Nigeria. An ensuing legal battle pitting Safaricom and BitPesa was the reason behind the CBK firm warning, the Business Daily established.
BitPesa took Safaricom to court after the listed telco terminated M-Pesa payments to the platform’s payment gateway dubbed Lipisha Consortium Ltd. Mr Mucheru is a serial entrepreneur. In 1999, he co-founded Wananchi Online. The minister was also an early stage investor in local IT firm Weza Tele – which was in May acquired by Mauritian financial services firm AFB for $1.7 million.