A look at how Stablecoins and Bitcoin compare against each other.
As Kenya’s digital economy grows, the legal landscape surrounding cryptocurrencies is evolving rapidly. Among the most debated digital assets are Bitcoin and Stablecoins whereby each has distinct characteristics, risks, and regulatory implications. For fintech founders, payment platforms, and institutional investors, understanding the legal differences between stablecoins and Bitcoin is essential for compliance, innovation, and investment.
“It means you’re on your toes and you’re aware of the problem,” says Andrew Buck, business lawyer at Avvocato Law in Winnipeg.”
What Are the Key Differences?
Bitcoin is a decentralized digital currency that operates on a proof-of-work blockchain, with no central issuer or backing. It is primarily used as a speculative store of value or alternative investment class. In contrast, Stablecoins are crypto-assets typically pegged to the value of a fiat currency (like the US dollar or Kenyan shilling), and are often backed by reserves or algorithms. This makes them more suitable for payments, remittances, and cross-border settlements.
Legal and Regulatory Treatment in Kenya
Kenya’s regulators, led by the Central Bank of Kenya (CBK) and Capital Markets Authority (CMA), treat digital assets cautiously. The CBK has repeatedly warned that Bitcoin is not legal tender, nor is it recognized as an official payment instrument. Therefore, its use is currently unregulated and high-risk, with tax and AML obligations still unclear.
Stablecoins, however, offer a more structured pathway to regulation. In particular, stablecoins issued by licensed institutions or integrated into Payment Service Provider (PSP) platforms could fall under CBK’s National Payment Systems Act or even CMA oversight, depending on how they’re structured and offered to the public. Stablecoins could enable fintechs to create mobile-money-like solutions with blockchain benefits provided legal safeguards are put in place. Additionally, stablecoins are easier to integrate into compliance programs, including Know Your Customer (KYC) and Anti-Money Laundering (AML) policies, due to their issuers’ potential for traceability and oversight.
Practical Use Cases for Kenya’s Digital Finance Market
In Kenya, stablecoins present a major opportunity in:
- Forex & cross-border trade: By reducing reliance on volatile fiat exchange rates
- Peer-to-peer lending & SACCO innovations: Through tokenized units and smart contracts
- Diaspora remittances: Enabling near-instant and low-cost settlements
- Digital merchant payments: With stable and fast settlement guarantees
Bitcoin, while popular for speculative investing and long-term holding, is less practical for daily use due to its high volatility, slow transaction times, and limited scalability.
Why This Matters for Kenyan Fintechs, Investors, and Policy Leaders
As Africa’s fintech market matures, stablecoins may become the bridge between regulated finance and blockchain utility. Meanwhile, Bitcoin will likely remain a store of value or crypto-asset for high-risk portfolios.
The legal distinction between the two is not just academic it is determined which regulator has jurisdiction, what licensing is required, and how investor protections apply. At EKC Advocates, we help fintech startups, digital platforms, and institutional investors navigate Kenya’s emerging crypto laws. If you’re planning to launch a stablecoin, use Bitcoin for treasury, or structure compliant tokenized offerings, reach out to us for strategic legal guidance tailored to Kenya’s regulatory framework. Email: eddah@ekcadvocates.com
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