BitPesa Remains Discontinued from M-Pesa

News and Analysis

According to the recent ruling by the Kenyan High Court, local operator Safaricom servicing M-Pesa will not have to provide access to bitcoin startup BitPesa. Though the case is far from being dismissed, the current ruling would prolong the service’s inability to operate as is. Last month, the mobile payments company Lipisha’s accounts had been suspended by Safaricom, which deprived BitPesa from accessing M-Pesa.

The startup is known for using mobile payments system for offering its customers an option of its bitcoin services. The service became popular, as the country’s banking infrastructure is underdeveloped.

Judge Joseph L. Onguto stated that Safaricom had its reasons for suspending Lipisha’s account due to a provision in the contract between Lipisha and Safaricom. Terminating the access to the account in the first place was justified by possible loss of Safaricom’s money transmission license because of BitPesa’s bitcoin operations. Safaricom’s point was in the fact that BitPesa’s bitcoin operations allegedly violate local AML requirements.

Meanwhile, the Central Bank of Kenya issued a “warning” as to dangers inherent in dealing with cryptocurrencies. Notably, the warning was published as a paid advertisement, and mentioned several hints on possible future introduction of digital currency regulation. It is unknown, whether the publication had any influence on the judge’s ruling; however, he said that, according to the Central Bank, usage of bitcoin, which is not a legal tender in Kenya, disentitles BitPesa to use such words as ‘money remittance’ or ‘money transfer’.

The judge stated that the matters are subject to further exlporing in a future hearing.

Following the hearing, the BitPesa representative stated the company was generally satisfied with the ruling as it allows the company to continue confronting “Safaricom’s wrongful and unlawful bullying”. Currently BitPesa is working with another company, Airtel Money, in order to carry on providing its services as the proceedings continue.

“The Court has not dismissed BitPesa’s case, but rather has ruled only that BitPesa is strong enough as a company that it does not require access to M-Pesa to survive during the course of the case,” BitPesa CEO Elizabeth Rossiello stated.

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