In November 2015, Kenyan startup BitPesa woke up to a disabled payment gateway. Safaricom, owner of M-Pesa — a mobile payment system serving 17 million Kenyans at that point — explained its actions as a fight against money laundering. The essence of the claim: BitPesa used bitcoin for international transfers without a Central Bank license. The paradox is that M-Pesa itself once started without special regulation — simply as an SMS service for transferring mobile airtime between subscribers.
The Kenyan money transfer market in 2013 was valued at over $1 billion annually. A family in Nairobi receiving money from a relative in London through Western Union paid a fee of around 9.2%. A bank transfer cost 19.8%. BitPesa, launched by Elizabeth Rossiello in March 2014, offered 3% — using bitcoin as an intermediate asset.
The technical architecture resembled a bridge with two currency gateways. A sender in the UK converted pounds to bitcoin on a European exchange. BitPesa transferred BTC through the blockchain (bypassing SWIFT, correspondent banks, and currency controls), converted them to Kenyan shillings on a local exchange, and withdrew to the recipient through M-Pesa. Operation time — several hours versus several days for banks. Fee — six times lower than Western Union.
M-Pesa earned hundreds of millions of dollars on international transfers. Every transaction passed through its infrastructure — a network of 40 thousand agents, mobile wallets, integration with banks. BitPesa bypassed this entire mechanism, using blockchain as a parallel rail. If banks called fintech startups parasites on their payment networks, then M-Pesa got its own parasite — one that didn't use its rails at all.
November 12, 2015 Safaricom disabled the Lipisha payment gateway through which BitPesa accepted payments from clients. Formal justification: the Proceeds of Crime and Anti-Money Laundering Act requires financial intermediaries to verify counterparties. BitPesa has no Central Bank license for bitcoin operations, therefore working with it violates anti-money laundering legislation.
BitPesa filed a lawsuit in Kenya's High Court. The plaintiff's argument: cryptocurrencies are not banned in the country, no special license for them exists, and Safaricom is using regulatory uncertainty to eliminate a competitor. December 15, 2015 Central Bank Governor Patrick Njoroge issued a public warning: bitcoin is not legal tender and is not regulated in Kenya. No direct ban followed, but the signal was received: the regulator won't protect cryptocurrency companies from pressure by traditional players.
Vodafone, Safaricom's parent company, had every reason to guard its subsidiary's monopoly. M-Pesa controlled about 80% of the digital payments market in Kenya. Losing the profitable international transfers line meant not just revenue decline — it undermined the business model itself. M-Pesa earned on volume: the more transactions, the cheaper it could make domestic transfers (subsidizing them with international commissions), the stronger the network effect. Bitcoin threatened to break this chain.
M-Pesa was created as a financial inclusion tool. In 2007, 71% of Kenyans had no bank accounts. Safaricom turned a SIM card into a wallet: users could send money via SMS, pay bills, receive salaries — without visiting a bank. By 2013, more transactions passed through M-Pesa than through the entire country's banking system.
BitPesa realized the same mission — but at the next level. If M-Pesa bypassed banks within the country, blockchain bypassed banking infrastructure globally. Kenyan labor migrants in Europe and the US sent home about $4 billion annually — roughly 3% of GDP. Every percentage point of commission — that's hundreds of millions of dollars settling with intermediaries instead of reaching families.
In February 2015, BitPesa raised $1.1 million in investment from Pantera Capital and other funds (total funding grew to $1.7 million) and began expansion into Uganda, Tanzania, and Nigeria. Among the company's shareholders was Joe Mucheru — later nominated for Kenya's ICT minister position. He publicly supported the need to regulate cryptocurrencies, but not ban them.
Safaricom used the same argument Western banks applied against it: consumer protection. Bitcoin is volatile, opaque, used for money laundering. Oversight, licensing, control are needed. The irony is that M-Pesa also worked in a regulatory gray zone for a long time — until the Central Bank created a special category for mobile money after the fact.
BitPesa survived. In 2019, the company rebranded to AZA Finance and switched from retail transfers to the B2B market: currency conversion for businesses trading between Africa and the rest of the world. By this point, hundreds of millions of dollars in annual transactions passed through the platform.
Blockchain turned out not to be a replacement for M-Pesa, but its complement. Most Kenyans continued to receive money through M-Pesa — just now the sender abroad could save on commission if they used a cryptocurrency bridge. AZA Finance stopped competing with Safaricom directly and occupied the niche of wholesale currency operations.
The Central Bank never issued either a ban or a licensing regime for cryptocurrencies. Regulatory uncertainty persisted — and this turned out to be advantageous for incumbent players. New startups risked repeating BitPesa's fate: build a business, then discover that a key partner can disconnect them on a formal pretext.
M-Pesa didn't disappear or lose position. But its monopoly ceased to be absolute. Bitcoin proved that you can build financial infrastructure that doesn't depend on a telecom's permission. The question is whether this is enough to change the balance of power, or whether bypass technology turns into niche technology — while the old monopolist holds control over entry and exit points.