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Kenya Return: Luno Aims for Excluded Cryptocurrency Users on Risky P2P Platforms

Expanded crypto platform Luno re-enters a more challenging Kenyan market, dominated by P2P players. However, this crypto heavyweight perceives potential prospects.

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3 min read
Luno makes a return in Kenya, aiming to serve crypto enthusiasts who find traditional P2P platforms...
Luno makes a return in Kenya, aiming to serve crypto enthusiasts who find traditional P2P platforms too risky.

Kenya Return: Luno Aims for Excluded Cryptocurrency Users on Risky P2P Platforms

In a strategic move, UK-based crypto company Luno has re-entered Kenya's market after a seven-year absence, expanding its regional presence. The decision to return was based on Kenya's significant market size, Luno's enhanced capacity and compliance readiness, and the potential for regulatory development.

Over the past decade, Kenya has grown into East Africa's most active cryptocurrency market, with the rise of mobile money platforms like M-Pesa and increasing smartphone penetration. However, the absence of a formal licensing framework for crypto exchanges has left companies like Luno operating in a grey area.

Luno initially left Kenya in 2014 due to a Central Bank of Kenya circular that prevented banks from working with crypto exchanges. But by 2019, Luno reassessed its African expansion strategy, prioritizing Uganda first due to its clearer regulatory environment, while still viewing Kenya as the "prize" because of its large and tech-savvy crypto user base.

Now, a new Virtual Asset Service Providers (VASP) Bill is in the works, promising formal licensing under the oversight of the Central Bank of Kenya and the Capital Markets Authority. This regulatory development is a significant step towards bringing a level of trust and stability to the market, setting the standard for crypto platforms.

Luno's return is driven by several key reasons. The market potential in Kenya is immense, with a large, informed population interested in secure and simple financial tools. Luno's experience and preparedness, gained from its global growth to over 15 million users and the acquisition of a crypto license in South Africa, give it confidence to operate in Kenya even without a formal licensing framework.

Luno sees an opportunity to target users who find peer-to-peer platforms risky and want a regulated, trustworthy alternative. The Kenyan market is now dominated by P2P platforms and large foreign players like Binance, Huobi, and OKX, making competition tougher. However, Luno is well-positioned to navigate this transitional phase due to its regional experience, especially with South Africa’s licensing.

Luno Kenya has strong anti-financial crime, compliance, and cybersecurity teams and mature systems in place. The company assesses the source of funds and customer behavior during onboarding, checks for sanctions and politically exposed persons, and monitors customers' trading activity. Luno defends accounts by alerting customers to phishing and scams and blacklisting malicious devices.

The passing of the VASP Bill will bring clarity about the pathway to licensing for the crypto industry in Kenya. The vast majority of Kenya's potential crypto market prefers clarity and transparency in the services they use. Luno bears the 10% excise duty burden, and it is worked into their fees. The excise duty reduces margins but offers a better customer experience and makes collection and remittance easier.

Luno Kenya has engaged with all relevant regulators, including the Central Bank of Kenya, the Capital Markets Authority, and the Financial Reporting Centre. Its immediate goal is to offer a safe, simple, secure, and transparent service in Kenya, based on over 13 years of secure operations with no hacks.

In conclusion, Luno's return to Kenya is a testament to the country's vibrant and attractive crypto market. The company's strategic decision is based on Kenya's significant market size, its enhanced capacity and compliance readiness, and the potential for regulatory development, enabling it to serve users seeking safer, regulated crypto trading options despite the current licensing gaps.

  1. With the growing popularity of mobile money platforms like M-Pesa and increased smartphone penetration, Kenya has emerged as East Africa's most active cryptocurrency market over the past decade.
  2. Despite the absence of a formal licensing framework for crypto exchanges, Luno, a UK-based crypto company, has decided to re-enter Kenya's market, seven years after its initial departure.
  3. The potential for regulatory development and Luno's enhanced capacity and compliance readiness have prompted the company to target Kenya's large and tech-savvy crypto user base.
  4. As the crypto industry in Kenya awaits the passage of the Virtual Asset Service Providers (VASP) Bill, Luno is well-prepared with strong compliance, cybersecurity, and anti-financial crime teams, ensuring a secure and transparent service for its users.
  5. The passage of the VASP Bill is expected to bring clarity about the pathway to licensing for the crypto industry in Kenya, potentially attracting more businesses from the technology, finance, and education-and-self-development sectors.
  6. In the midst of general-news headlines about the crypto industry, Luno's strategic move to re-enter Kenya's market indicates a shift towards a more regulated and stable business environment, which could significantly impact the lifestyle and investment choices of Kenyans interested in blockchain, payments, startups, and the broader technology sector.

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