Kenya is not “in a hurry” to adopt cryptocurrency payments as risks across the globe rise, Central Bank of Kenya (CBK) said. The apex bank said the rollout of a Central Bank Digital Currency (CBDC) and the licensing for the official use of other cryptos in the East African nation is not a priority for Kenya currently.

“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.

Crypto assets

CBK says crypto assets are at a critical point globally due to the extreme volatility of the market and the recent collapse of stablecoins and crypto exchanges, which have slowed down uptake. The central bank said the global crypto industry winter started in 2022 with developments that have led to the reduction in the value of crypto assets and market capitalisation by over half since 2021.

“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. In Africa, Nigeria introduced a digital version of its currency, the Naira, in November 2021 in response to concerns that the rising popularity of crypto assets was threatening the banking system. Kenya was expected to follow suit.