The Central Bank of Kenya (CBK) has stated that Kenya is taking a cautious approach towards embracing cryptocurrency payments amidst increasing global risks. The CBK emphasized that the current focus in Kenya does not prioritize the implementation of a Central Bank Digital Currency (CBDC) or the official licensing for other cryptocurrencies.
“The rollout of CBDC should not be a race to be first. Presently, Kenya’s pain points in payments can potentially be solved by strengthening innovations around the existing ecosystem,” the apex bank said in its Banking Sector Supervision Report 2022 released on Monday evening.
The central bank said it would continue to monitor developments in the CBDC world and periodically assess the need for the payment method in Kenya.
According to the CBK, the global state of crypto assets has reached a critical juncture due to the highly volatile market conditions and the recent failures of stablecoins and crypto exchanges.
These factors have significantly hindered the adoption and acceptance of cryptocurrencies.
The central bank noted that the decline in the value of crypto assets and market capitalization by more than 50% since 2021 has marked the onset of a global winter for the crypto industry, starting in 2022.
“This volatility has led to investor caution and reduced interest in crypto assets. More importantly, it has highlighted key liquidity issues faced by cryptocurrency firms, exacerbated by poor governance frameworks,” said the CBK.
It noted that the growth of the crypto industry has been driven by the speed of transactions, low transaction costs, anonymity, promise of high returns, and lack of taxation mechanisms.