Is online forex trading illegal in Kenya - demo trading in forex

Is online forex trading illegal in Kenya ~ demo trading in forex

The question gets asked a lot by individuals who are just getting to discover that there is actual such a thing as trading of forex online. Most Kenyans are accustomed to the forex bureaus run at the city centre in tiny rooms where you go and exchange your dollars or whatever currency for the Kenyan shilling and vice versa.Online forex trading in Kenya is both legal and illegal. It just depends on

how you are trading. if you are running your own personal trading account then forex is not illegal. Reason being that government has no business regulating what you do with your money. It could be illegal because you do not pay taxes, but as matters currently stand there is no law mandating the collection of revenues from the trading of forex online. Maybe the idea will hit the taxman after he is done with the matatu industry.

Forex is however illegal if you are operating another persons account on their behalf. This is because, unless you are a bank or a Sacco you do not have a right to handle other peoples money. The Central Bank of Kenya rules and regulations prohibit handling other people’s money. The reason behind this is to protect the public from fraudsters or swindlers who could ask for your money by way of pyramid schemes.
It is this part of illegality that was used by the Central Bank of Kenya to trap VIPortal forex brokers. I cannot claim that VIPortal was out to swindle money from unsuspecting public, but I’m certain that they did not either seek legal advice or got raw advice before they started asking people to deposit money with them.

I do not know how to defend local banks that are also engaged in the trading of forex online. These are the institutions that trade in large scale and if the trading of  forex was illegal in Kenya then the Central Bank of Kenya should have started out by closing them. One could argue that a bank is a legal person as a result of incorporation and is therefore engaged in trading just like you and me. But we all know that the money banks use in trading of forex come from depositors like you and me. In effect they are using depositor’s money to trade yet the Central Bank sees no reason to close them down. Probably VIPortal could point out this double standard if their case ever goes to trial.
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