Kenya’s Interior Minister, Kindiki Kithure, has raised the possibility of imposing a cryptocurrency ban. He cited the opaque characteristics of digital currencies and their potential for facilitating money laundering as reasons for the government’s skepticism.
- Kithure expressed this position while addressing the Ad hoc committee investigating Worldcoin activities in Kenya.
- He emphasized his reluctance to allow cryptocurrency to operate in the country, saying that as a security minister, he needs to be convinced that there is clear ownership and transparency in the money involved in crypto trading.
- Kithure said that if the money in crypto trading cannot be traced until it enters a financial institution, he would hesitate to permit its use.
- Kithure said,
“Anyone in government or out of government, in the private sector or public sector who it’s established aided, supported, encouraged or even attempted to support any of those things in relation to Worldcoin, we will hold them accountable.
“No one is immune; nobody is excluded. If you are found on the wrong side of the law, action will be taken, even if it’s me, the security minister. I will take responsibility.”
Debunking the myths
- Contrary to Kithure’s opacity claims, cryptocurrencies are built upon blockchain networks with public ledgers, ensuring that all transactions are visible to everyone on the network. This transparency is a fundamental aspect of cryptocurrencies.
- The Bitfinex hack case being resolved challenges the narrative that cryptocurrencies are opaque. According to a Chainalysis blog post, blockchain analysis and conventional police work enabled law enforcement to apprehend the culprits and recover over $4 million of stolen cryptocurrencies.
- In addition, a cryptocurrency dealer in Zimbabwe, who stole $457,000 worth of cryptocurrency from accounts belonging to a Zimbabwean businessman, was traced and arrested.
- Alongside his transparency concerns, Kithure also alleged that cryptocurrencies are employed for money laundering and financing terrorism. However, he did not cite specific cases in which terrorists have utilized cryptocurrency to fund their activities.
- Kithure previously suspended Worldcoin activities due to security and privacy issues and an element of financial inducement in its approach.
- The Ad hoc committee found that over 350,000 Kenyans signed up for the Worldcoin project before its suspension, and each participant was paid about Sh7,000 in Worldcoin tokens (WLD), translating to Sh2.5 billion.
- The cryptocurrency (WLD) was subsequently converted into cash through M-Pesa. The committee noted that this transaction contravened the Proceeds of Crime and Anti-Money Laundering Act and could potentially involve terrorism financing since it was not declared as mandated by the Central Bank of Kenya (CBK).
- In response, the CBK governor, Kamau Thugge, acknowledged that cryptocurrency trading is not illegal within the existing regulatory frameworks. However, he underscored that cryptocurrencies are not officially recognized as a currency.