Implications of the Proliferation of Virtual Currencies on Transnational Organized Crimes (TOCs) in Eastern Africa

Executive Summary

The brief opines that the global proliferation of virtual currencies portends a rise in crypto-driven Transnational Organized Crimes (TOCs) risks to the Eastern Africa region if effective dissuasive measures are not implemented. The usage of cryptocurrencies globally rose by over 880% in 2020 with Kenya and Tanzania ranked 5th and 19th globally. Virtual currencies are digital forms of money that exist solely in electronic form including Cryptocurrencies, Centralized Virtual Currencies, and Central Bank Digital Currencies (CBDCs). They can take various forms depending on their use, nature, and underlying technology and are typically created, owned, and traded on digital platforms. While these innovations promote financial inclusion, they have also become enablers for TOCs. The recent pro-crypto policy directives by the Trump Administration will significantly catalyze the growth of global virtual currencies and Eastern Africa’s Crypto-driven TOC activities due to the non-existence of effective dissuasive measures. The crypto facilitated TOCs will be expedited by borderless nature of virtual currencies; jurisdictional arbitrage on virtual currencies; cybersecurity infrastructure preparedness; and linkages between regional informal and global illicit economies. The brief concludes that strengthening Eastern Africa’s digital security requires a multi-pronged approach as the absence of effective measures to disrupt combat crypto-driven TOC risks the region becoming a perpetual theater for transnational crypto cybercriminals, undermining its digital economic aspirations. Key recommendations include establishing regional cyber-defense hubs including the Nairobi Regional Blockchain Institute to undertake standardized training on crypto induced TOCs; harmonizing national and regional frameworks to monitor crypto’s dual use; strengthening cross-border intelligence sharing to disrupt TOC networks in real-time; enhancing technological capacity and cybersecurity infrastructure investment through public-private partnerships; and strengthening the use of advanced blockchain forensics for crypto-driven TOCs analysis to safeguard financial systems without stifling innovation.