The United Nations Conference on Trade and Development (UNCTAD) 2021 data indicates Kenya proportionally tops crypto ownership in Africa with 4.25 million or 8.5%. Toppling the United States’ 8.3%, data from UNCTAD suggests Kenya has high potential of leading the global cryptocurrency markets.
War-ridden Ukraine leads UNCTAD’s cryptocurrency ownership list with 12.7%. Ukraine is followed by Russia’s 11.9%, Venezuela’s 10.3%, and Singapore’s 9.4%.
But the collapse of the cryptocurrency market since November 2021 has also affected Kenyans. The high inflation and higher interest rates environment has led to investors withdrawing their funds from turbulent assets lately.
Kenya’s increasing exposure to cryptocurrencies in the midst of the current market crisis has drawn a warning from the United Nations (UN). Even though the Central Bank of Kenya (CBK) has issued warnings, the UN estimates that the possibility of a market meltdown has an impact on close to four million Kenyans.
“The returns from cryptocurrency trading and holding are, as with other speculative trades, highly individual. On balance, they are overshadowed by the risks and costs they pose in developing countries,” states UNCTAD.
The CBK and the United Nations express concerns over cryptocurrency market crashes, price fluctuations, financial instability, a lack of regulations, and illicit money laundering. But the CBK also agrees that cryptocurrencies can fuel financial inclusion.
The CBK is exploring the prospects of launching a Central Bank Digital Currency (CBDC). Intending to test CBDCs alongside its fiat currency, the CBK wants to contain cross-border payments costs with cryptocurrencies.
Also read: Crypto Owners Prohibited from Working on US Crypto Policies
UNCTAD reasons Kenya’s higher cryptocurrency adoption is due to low fee charges at exchanges, remittances, and access to the Internet.
“Finally, if left unchecked, cryptocurrencies may become a widespread means of payment and even replace domestic currencies unofficially [a process called cryptoization], which could jeopardize the monetary sovereignty of countries. The use of stablecoins poses the greatest risks in developing countries with unmet demand for reserve currencies,” UNCTAD’s Policy Brief notes.
As per Chainalysis report, Kenyans use cryptocurrency for:
- savings.
- initiating international transactions for remittances to family members working in Europe and North America.
- commercial purposes (buying goods to import and sell).
Other African nations ranked per their digital currency ownership in UNCTAD’s Top 20 economies are South Africa (7.1%) and Nigeria (6.3%).
