Swypt Launches Kenya’s First Decentralized Stablecoin, cKES
Swypt has introduced cKES, Kenya’s first decentralized stablecoin, pegged 1:1 to the Kenyan shilling.
This stablecoin has been integrated into Mento, another decentralized platform. This move highlights the growing trend in Kenya’s fintech sector, where stablecoins serve as an alternative to mobile money and banking systems.
However, the evolving regulatory landscape in Kenya could pose challenges to the platform’s growth.
Founded in 2023, Swypt aims to address inefficiencies in peer-to-peer (P2P) crypto trading. The company focuses on enhancing accessibility and efficiency in digital payments through solutions like stablecoin transactions and SME payments.
With the integration of cKES, users can now conduct cross-border transactions more easily. Additionally, payments will be processed faster and at lower costs, which is crucial for Kenya’s growing crypto market.
Despite the increasing need for a stronger crypto market in Kenya, the Virtual Asset Service Providers Bill, proposed by the National Treasury, could pose a major obstacle for platforms like Swypt. This law, if passed, would require crypto companies to establish local offices in Kenya and appoint executives subject to regulatory approval.
While it has not yet been enacted, its implementation would allow the government to license and regulate crypto service providers, potentially creating operational hurdles for companies like Swypt.
In addition to this, the Finance Act of 2023 introduced a 3% tax on income generated from the sale of digital assets. While this indicates the government’s intent to incorporate crypto into the formal tax system, it could also discourage users who might be concerned about increased transaction costs.
Under the proposed Virtual Asset Service Providers Bill, the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) would jointly regulate the crypto sector.
The CBK would oversee payment and currency-related service providers, while the CMA would be responsible for crypto trading, exchanges, and initial public offerings (IPOs) of virtual assets.
While these regulations could legitimize the industry, they could also introduce new compliance burdens for decentralized platforms.
In summary, the evolving regulatory environment in Kenya presents both opportunities and challenges for Swypt. While regulatory compliance could improve operational transparency, rising transaction costs could negatively impact user adoption.