A few Kenyan banks have started sending out warning alerts to clients engaged in cryptocurrency trading to be wary of the associated risks. These warnings have reportedly been sent to clients who have “used their credit and debit cards to buy cryptocurrencies on crypto exchanges.”
Crypto Trading Risks
According to a local report, one of the banks, NCBA Bank Kenya is now advising clients “not to buy, hold, or trade in virtual currencies.” In a warning sent to clients who have previously transacted on crypto exchanges, NCBA Bank said:
In accordance with the Central Bank of Kenya (CBK)’s circular No. 14 of 2015, virtual currencies such as Bitcoin are not legal tender in Kenya. No protection, therefore, exists for you as our customer in the event that the platform holding or trading in cryptocurrency fails or goes out of business.
Throughout the emailed alert, the NCBA Bank repeats the common lines that are used by central banks when attempting to discredit digital currencies. For instance, NCBA Bank says “transactions in virtual currencies are largely untraceable, making them susceptible to abuse by criminals.”
Unregulated Crypto Exchanges
Furthermore, the bank also warns that cryptocurrencies are traded on exchange platforms which “are not properly regulated” and that consumers risk losing all their funds in the “event these exchanges collapse or close business.” While NCBA Bank clients can still transact with cryptocurrency exchanges, the bank still warns that it does not “approve cryptocurrency transactions.”
In the meantime, the report speculates that the banks’ latest action could mean that the CBK still frowns on cryptocurrencies. For example, in 2015 the central bank issued an advisory asking Kenyans to desist from cryptocurrency transactions. Similarly, in April 2018, the CBK cautioned banks against dealing in cryptocurrencies.
However, despite these warnings, crypto trading continues to grow in Kenya and some reports say the country now has the second-largest peer-to-peer traded volumes on the continent. It remains to be seen if acts by Kenyan banks are going to slow down crypto traded volumes.
What are your thoughts on Kenyan banks’ decision to warn clients against dealing with crypto exchanges? You can share your views in the comments section below.