Kenyan government to ban Bitcoin money transfers

A Kenyan High Court judge has ruled that M-Pesa operator Safaricom does not need authorization to access Bitcoin startup BitPesa, which is currently in the midst of a legal dispute.
Prior to this, mobile payment companies Lipisha, as well as BitPesa, asked Kenya's High Court for a preliminary ruling that they could access M-Pesa, while their claims that they did not meet Safaricom's requirements were under review.
Last month, it was reported that BitPesa lost access to M-Pesa in mid-November after its payment gateway partner, Lipisha, was suspended by Safaricom. BitPesa uses Lipisha to make M-Pesa a payment option for Kenyan bitcoin buyers.
Court documents obtained by CoinDesk show that Judge Joseph L Onguto agreed with Safaricom’s Dec. 14 ruling that Safaricom had reason to suspend Lipisha’s account, based on the contract between the two companies and Safaricom’s fear of losing its money transmission license due to BitPesa’s bitcoin business issues.
Notably, Justice Onguto weighed whether BitPesa’s business would decline under the money transfer company’s regulations, stating: “Since BitPesa has indicated that it accepts Bitcoin from different countries around the world and exchanges it for local African currencies, including Kenyan shillings (a British unit of currency prior to 1971), I prima facie find that the second application is engaged in a remittance business.”
Onguto pointed to a communication submitted to the court showing that the Central Bank of Kenya believed that BitPesa's use of bitcoin meant it could not use the terms "remittance" or "transfer." He also highlighted a 2014 circular from the central bank that said it did not regulate virtual currency activities.
“The applicant agrees with that statement, while the respondent disagrees,” Onguto said, adding that the matter should be explored more thoroughly at a future hearing.
BitPesa declined to comment on Onguto’s comments about the transfers, but the company told CoinDesk it supports the ruling and is working with a Zambian telecom company called Airtel Money to offer the service in Kenya.

“We are pleased with the High Court’s decision, which allows BitPesa to continue to fight Safaricom’s wrongful and illegal conduct,” BitPesa said. “Rather than putting BitPesa’s case on hold, the court ruled that in the meantime, BitPesa is strong enough as a company that it does not need access to M-Pesa to sustain its operations.”
BitPesa said it was exploring its next steps with legal counsel and declined to comment further.
The ruling comes as the Central Bank of Kenya issued a new announcement on digital currencies, such as Bitcoin, which are no longer considered legal tender, an outcome that BitPesa anticipated would be a possible outcome of the case.
The central bank noted that “currently, there are no licensed entities in Kenya that use virtual currencies such as Bitcoin and provide remittance services and money transfers.”
“The Central Bank of Kenya reiterates that Bitcoin and similar products are not legal tender and are not regulated in Kenya. As such, the public should refrain from trading in Bitcoin and similar products,” the central bank said.