A few years ago, digital asset traders in Kenya couldn’t get a bank to open accounts for them and had to resort to mobile money, whose daily transaction limits are much lower. Now, one in three banks is ready to venture into digital assets, according to a new report by the country’s central bank.
In its 2024 Innovation Survey, the Central Bank of Kenya (CBK) revealed that “31 percent of the respondents indicated that they were highly likely to undertake activities in the area of virtual assets,” including digital currencies like BSV, non-fungible tokens (NFTs), and other digital tokens.
Kenya has been one of the global leaders in adoption, ranking first globally for peer-to-peer digital asset transaction volume in 2020 and 2021. It has also ranked highly for overall adoption every year since, with South Africa and Nigeria the only African countries with more users.
However, like in most African nations, the banking industry has steered clear of the sector. For years, most Kenyan banks denied service to VASPs and any individual whose account was linked to digital asset platforms. In some cases, they shut down accounts they believed to be dealing in ‘crypto.’
Times have changed, and with adoption skyrocketing, the lenders are now warming up to the sector, CBK revealed.
“Financial institutions indicated their interest in virtual assets, noting the potential opportunities of virtual assets in enhancing financial access to the unbanked by providing alternative payment and investment channels, improving transaction speed, and reducing transaction costs,” the report noted.
In 2022, the United Nations Conference on Trade and Development (UNCTAD) estimated that four million Kenyans owned digital assets. Other more recent reports put this number at over six million, which accounts for over 10% of the population. The country’s tax agency chair has stated that in the financial year 2022, the total digital asset market turnover hit Kshs. 2.4 trillion ($19 billion).
While the banks have warmed up to digital assets, they are wary of associated risks “such as challenges in enforcing Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) controls, cybersecurity risks, fraud, and high volatility among others,” the CBK report stated.
Kenya still lacks a comprehensive regulatory framework for the digital asset sector, which limits the involvement of highly regulated entities such as banks. Like most jurisdictions, authorities have had to apply general fintech laws to the sector. However, the nuances of digital assets, such as their decentralized nature or high volatility, hinder this application.
Uber weighs digital asset payments
Elsewhere, ride-hailing giant Uber (NASDAQ: UBER) is once again considering integrating digital asset payments, CEO Dara Khosrowshahi has revealed.
Speaking at a tech conference, Khosrowshahi said the company is in the “study phase,” but leaning more toward stablecoins.
“I think stablecoins are one of the more interesting instantiations of crypto that have a practical benefit beyond being a store of value,” he stated at the Bloomberg Tech Summit in San Francisco.
“Stablecoins seem quite promising, especially for global companies moving money around internationally. That’s super interesting to us, and we’re definitely going to take a look.”
It’s not the first time Uber has claimed to be exploring digital assets. In 2021, Khosrowshahi stated that the company was weighing digital asset payments but would not follow Tesla (NASDAQ: TSLA) into purchasing BTC on its balance sheet. However, nothing came of this pledge.
Uber was also a member of Meta’s (NASDAQ: META) ill-fated Libra-cum-Diem stablecoin project, which Mark Zuckerberg abandoned in 2022 after being frustrated by regulators globally.
Whether Uber follows up on its recent stablecoin pledge remains to be seen. Meanwhile, dozens of other giants in finance, tech, and beyond are scrambling to integrate stablecoins into their businesses or launch new stablecoins themselves.
Watch: Tech redefines how things are done — Africa is here for it
