The Capital Markets Authority (CMA) in Nairobi, Kenya, has proposed the creation of a special unit to handle cryptocurrency related issues.
The unit would include all relevant regulators such as itself and Central Bank of Kenya (CBK), according to Standard Digital. The proposal is included in the Capital Market Soundness Report, “Staying the course in a Turbulent World of Increasing Protectionism,” released Friday by CMA Chief Executive Paul Muthaura.
“There is need for regulators to devise a common approach towards handling issues revolving around cryptocurrencies and Initial Coin Offerings (ICOs),” the report states. “A joint workgroup by financial sector regulators could be put in place to tackle issues around cryptocurrencies and ICOs.”
The CMO issued a notice in February warning investors against participating in ICOs, noting it has not approved any such offerings. The regulator said all such offerings are unregulated and speculative investments with significant risk exposure.
CBK has taken a similar position, warning the public against bitcoin, which has experienced wide value fluctuations. Bitcoin traded at about $17,000 (Sh1.7 million) early this year before falling to $6,926 (Sh700,000) at the end of March.
“This volatility in price fluctuation remains a concern even as regulators seek to strike a balance between managing the risks that accompany innovations and avoiding being an impediment to market-led innovation,” CMA noted
Regulators must communicate their willingness to accommodate fintechs to remove the perception that regulators do not appreciate new innovation, the authority noted.
Open To Blockchain
Sheila M’Mbijjewe, CBK deputy governor, noted earlier this month at the Euromoney East Africa Conference that new technologies like blockchain should be embraced cautiously. She said regulating fintechs should be balanced against encouraging innovation so that the technology’s growth does not bring an erosion of public confidence.
“We (CBK) are not the innovators so we cannot move ahead,” M’Mbijjewe said. “If we move behind the market, we will have a problem. Essentially, we have to move alongside innovations.”
CBK) Governor, Patrick Njoroge also told legislators earlier this month that he had warned all banks warning on the dangers of virtual currencies. In addressing the National Assembly Committee on Finance at Parliament Buildings, he warned banks against dealing in virtual currencies.
In December 2015, CBK issued a notice warning the public against virtual currencies.