Kenya's capital markets industry regulator, the Capital Markets Authority (CMA), has warned the public of dangers in Initial Coin Offers (ICO).

A notice from the CMA read: "It is notified for general information that the CMA has not as of this date, approved any Initial Coin offering. The ongoing offerings are unregulated and speculative investments with considerable risk to the investor. Some of the risks are identified by the international organisation of Securities Commission, (of) which Kenya is a member."

Risks cited by the CMA include heightened potential for fraud, where investors are exposed to fraud by the issuers of the ICOs. CMA also noted that most ICOs are cross border and could leave investors without protection in case of collapse or litigation.

NuruCoin and UwezoCoin are local cryptocurrencies that are currently raising funds through ICOs. Africa wide, SureRemit conducted a successful ICO in December 2017 and raised US$7 million to enhance its remittance business with cryptocurrency.

The regulator added that it is not entirely against blockchain technology. "CMA is cognisant of the importance of FinTech and the benefits that can be derived from leveraging blockchain technology and is willing to work with interested parties through the already established Sand Box model for purposes of supporting innovative FinTech products in a controlled and safe environment," the statement concluded.

In a recently released report, State of the Internet Kenya 2017, the Bloggers Association of Kenya (BAKE) noted that many government bodies such as the Central Bank have been a hindrance to innovation around blockchain, where cryptocurrency derives its technology.

"Raising awareness and demystification of the technology should be a priority for the coming year. Similarly with cryptocurrency, the Central Bank previously warned Kenyans against transacting in the digital currency. In addition, there have been arrests of Bitcoin traders reported," reads an excerpt from the report.

In November 2017, the Kenyan Wall Street reported that Bitcoin traders Emma Kariuki, Stanley Mumo, and Timothy Gachehe were charged with conspiracy to commit a felony through a trading platform LocalBitcoin.

"An enabling environment should be fostered for the adoption of Blockchain technology. This calls for formulation of broad based policy principles applied among trusted peers and to avoid using regulation for specific technologies," the BAKE report added.