Listers Did we miss this unfolding precedence setting battle? In brief:- Safaricom has been sued by two mobile money service providers for suspending their services through alleged intimidation. Lipisha Consortium Limited and Bitpesa Limited Friday went to court over termination of their services on November 12. The pair offers a platform for businesses that enables them to collect, process and integrate payments from customers and clients using mobile money. Read on:- http://www.nation.co.ke/business/Mobile-money-providers-sue-Safaricom-for-se... My questions and comments:- 1. Is Safaricom correct in shutting down a service without notice to protect its brand? Your guess here is as good as mine. 2. The legality or otherwise of bitcoins seems to be the main bone of contention here. Here's an opinion from Wikipedia on the treatment of bitcoins in various countries. https://en.m.wikipedia.org/wiki/Legality_of_bitcoin_by_country 3. Did the CBK ask Safaricom to shut down the service or is Safaricom acting unilaterally because of point 1 above? 4. How do we protect the innovation ecosystem in the region from such happenings? This may well be a legitimate case of a startup that didn't do its homework regarding the regulatory framework in the space it chose to play in. According to Rosemary Kimwatu, a Legal Officer in the Tech Fin sector:- "The main problem Bitpesa faces is that cryptocurrency operate from an unrecognised payment system. The position by CBK on Bitcoins is that it's a currency that operates outside the purview of the normal payments system and can therefore not be monitored in regards to Money Laundering. A payment system/platform needs to work within a recognized payment system because then funds origination and destination can be tracked. Bitcoins however are not from the banking system so how will one know if someone is not using it to clean up illegally obtained funds?" Good and solid arguments. My only problem with that argument is that innovation is almost always ahead of regulation. And Safaricom, of all organizations should know better than to behave like this. I fully understand the situation they are in and I can imagine the legal heads at Safaricom working overtime to 'contain' a potential mine field situation that can contain its core Mpesa System. I however believe that a softer approach could have had a better effect. My humble opinion:- Safaricom needs a better approach than the ones they take handling potential Frenemies. The case of Equitel is still fresh in our minds. The narrative is going against them and they need to manage this. The current scenario paints them as a Bully intent on crushing any potential threat to their payment platform. They are better than this. However Rosemary has a different argument:- "The whole thing is bad for innovation but the battle should be with the regulator not Safaricom. It would be in everyone's interest if CBK was forced to deal with change but this won't happen if the Bitcoin guys fight Safaricom. They have to deal with it in the right way by facing the regulator head on and proving how secure their system is in regards to Anti Money Laundering (AML) by showing how it has been done in other countries." Can't argue with that.. 5. A few day ago I talked about the Angani issue. Here's another compelling issue to add on to our bucket list of helping and growing the Startup space in our region - Compliance with Regulation. It's become such a major component of institution building that we can't play 'Pata-Potea' (loosely translated as gambling) with it anymore. #TechRoundTable, are you listening? Ali Hussein Principal Hussein & Associates +254 0713 601113 / 0770906375 Twitter: @AliHKassim Skype: abu-jomo LinkedIn: http://ke.linkedin.com/in/alihkassim Blog: www.alyhussein.com "Discovery consists in seeing what everyone else has seen and thinking what no one else has thought". ~ Albert Szent-Györgyi Sent from my iPad