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Some Kenyan banks are discouraging their clients from engaging in crypto transactions

These banks seem to be targeting clients who have used their debit or credit cards to buy crypto on exchanges.

Nairobi City Center / Image by: Wikimedia Commons

Tue, 08 Jun 2021, 11:44 am UTC

Some banks in Kenya have been sending out letters to clients engaged in crypto trading to warn them of the risks associated with the asset class. These banks seem to be targeting clients who have used their debit or credit cards to buy crypto on exchanges.

One of the banks that have been sending warning alerts is NCBA Bank Kenya, according to local publication Bitcoinke. In its letter, the bank advised clients “not to buy, hold, or trade in virtual currencies.”

“In accordance to Central Bank of Kenya’s circular No. 14 of 2015, virtual currencies such as Bitcoin are not legal tender in Kenya,” NCBA Bank Kenya told clients. “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.”

The bank pointed out crypto’s potential use in criminal activities as one of the risks associated with digital currencies. NCBA Bank stated that “transactions in virtual currencies are largely untraceable, making them susceptible to abuse by criminals.”

The bank also pointed out that digital currencies are traded in exchanges that are “not properly regulated. This could mean that investors could lose all of their money should these platforms close shop or collapse as consumers have no legal recourse.

NCBA also highlighted that cryptocurrencies are not backed by other assets calling them “speculative in nature.” Due to this lack of value, the bank warned that investors could potentially lose due to unfavorable price swings.

“NCBA Bank does not approve cryptocurrency transactions done using your Card or transact with institutions trading in virtual currencies,” the bank concluded in its warning letter. “Safeguard your finances by not buying, holding, or trading in virtual currencies.”

According to Bitcoin.com, this development could mean that the Central Bank of Kenya still frowns on cryptos. The central bank issued an advisory in 2015 asking Kenya’s citizens to refrain from making crypto transactions. In 2018, it also warned banks against dealing in digital currencies.

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