- The level of acceptance among the population will be extremely low
- Instead, the Central Bank proposes to conduct a study on the real demand for cryptocurrencies.
- After that, the regulator and the government promise to hold consultations on the creation of a regulatory framework for the industry.
Last week, the Central Bank of Kenya published report according to the CBDC study launched in 2022. In it, the regulator states that it sees no reason to integrate digital currency in the short or medium term.
The Central Bank studied two main positive factors of economic impact when using CBDC – financial availability and cost reduction in cross-border transfers.
Regulator Governor Patrick Njoroge has previously stated that digital currency will not be a panacea. Yes, over the past years, the availability of electronic money in the country has increased (from 26% in 2006 to 83% in 2022). But this is a merit in the first place of mobile operators.
In particular, this is the M-Pesa system from Vodafone and Safaricom. At the same time, the digital currency of the Central Bank is unlikely to find application at the micro level. Less than a third of Kenyans use smartphones, let alone e-wallets.
That said, CBDC integration comes with many risks. First of all, these are illegal financial flows and cybercrime.
Instead, the Central Bank calls for a comprehensive study of the level of acceptance of cryptoassets in the country. Unlike CBDCs, private tokens do not require huge implementation costs, while remaining a more reliable option, at least in the short term.
Based on the data received, the regulator and the government will hold consultations to develop a possible regulatory framework in this sector. But when exactly this will happen is unknown.
Interestingly, earlier the authorities in Kenya announced plans to impose a 3% tax on cryptocurrency and NFT transactions. And at the same time, the country does not even have a legal definition of digital assets. This decision caused outrage among human rights activists.