Bitcoin accounts in Kenya have been shut down

When Bitcoin startups began in Africa, it was a major hit. But when BitPesa a startup that began in Kenya started, local investors, venture capitalists and the business people were excited. The startup gained a lot of attraction and managed to secure millions of dollars. But as it attracted more attention, it wasn’t just a small business anymore, which meant they had to partner with a recognized company and for their case; Safaricom was that company. For those who are not familiar with what a Bitcoin is, it’s a new currency that was introduced in 2009 by an unknown person. The whole point with this system is to ensure that transactions are made without any recognition, meaning no banks. There are no transaction fees and no need to give your real name, hence why people have an alias. But when the Central Bank of Kenya banned this startup all bank accounts in this startup were closed leaving some important people stranded.

Just recently, the Kenyan federal government has tightened regulations on this virtual currency. Due to these new rules, Kenyan minister of communications and information Technology Joe Mucheru is unable to sell his BitPesa shares. Mucheru who was one of the BitPesa directors and shareholder was not amused, as he could not get a buyer for his shares. The fact that BitPesa is an international company would mean that shareholders should be able to sell to willing buyers outside Kenya including Nigeria, Tanzania and Uganda. BitPesa also has offices and staff members in San Francisco although their main headquarters is in Nairobi.

The startup had been doing very well, until legal battles with the largest mobile network operator, Safaricom. When BitPesa and Safaricom partnered, BitPesa had the permission to use Safaricom’s pay bill API service.

According to this, the partnership, allowed BitPesa to handle cross-border payments across Africa using Bitcoin, which led to a significant decrease in transaction fees and processing time. Kenyan users and customers from its neighboring countries were attracted to the efficiency and simplicity of the BitPesa platform.

However, Safaricom began to feel threatened as BitPesa’s transaction volumes and user base increased rapidly. The telecom giant believed that if BitPesa continued to maintain its momentum, it would most likely emerge as a serious competitor of Safaricom.