Using cryptocurrency for remittances to Kenya carries real risks, and PesaMarket lays out an honest assessment of what can go wrong. Sending money via cryptocurrency carries real risks. Here is a truthful assessment of the things that can go wrong.
Risk Categories
1. Financial Risks
2. Technical Risks
3. Security Risks
4. Legal Risks
5. Operational Risks
Financial Risks
Price Volatility Risk
What it is: Cryptocurrency prices can change a lot, even during a transfer.
Example:
- Send $500 in Bitcoin
- The price drops by 10% during confirmation
- The recipient receives a value of $450
How to reduce the risk:
- Use "stablecoins" (e.g., USDT, USDC)
- Complete the transfer quickly
- Don't hold cryptocurrency for transfers over a long period
Conversion Loss
What it is: Every conversion step has a cost.
Where you lose:
- USD → Crypto: 0.5-1.5%
- Network fees: $1-20
- Crypto → KES: 2-5% (over the price markup)
Total loss: 3-7% on a typical transfer
How to reduce the risk:
- Make sure you account for all costs before starting
- Compare against traditional services
- Use networks that work efficiently (e.g., TRC-20)
Hidden Fees
What it is: Costs that aren't obvious right away.
Examples:
- Withdrawal fees from an "exchange"
- Network congestion fees
- "Spreads" (price gap) on "P2P" platforms
- Fees from multiple transactions
How to reduce the risk:
- Find out all the fees before starting
- Consider the recipient's conversion costs.
Technical Risks
Wrong Address
What it is: Sending cryptocurrency to a wrong address.
Impact: The money is lost entirely. It cannot be recovered.
This is how it happens:
- Copy/paste mistakes
- Wrong network (e.g., ERC-20 versus TRC-20)
- An attacker changes the address
- Typing errors
How to reduce the risk:
- Double-check the address
- Send a small test transaction first
- Use address book features
- Confirm network compatibility
Wrong Network
What it is: Sending money on a non-matching blockchain.
Example:
- Send USDT on the Ethereum network
- The recipient expects the Tron network
- The money is stuck or lost
How to reduce the risk:
- Confirm the network with the recipient
- Match exactly what they expect
- Ask if you don't know
Losing the Wallet
What it is: Losing access to the wallet.
Causes:
- The seed phrase is lost
- The password is forgotten
- The phone is lost/stolen
- Hardware failure
Impact: All the money in the wallet is lost forever.
How to reduce the risk:
- Store the seed phrase securely
- Keep multiple backups in different places
- Don't store a large amount of money
- Move the money after receiving it
Smart Contract Risks
What it is: Bugs in cryptocurrency protocols.
Impact: Money can be locked or stolen.
How to reduce the risk:
- Use verified cryptocurrencies
- Avoid new or experimental currencies
- Stick to large platforms.
Security Risks
P2P Scams
Common types:
Fake Payment Scam:
- The person claims they paid via M-Pesa.
- They show a fake screenshot.
- You release the cryptocurrency.
- There is no real payment.
Payment Reversal Scam:
- A real payment is made.
- You release the cryptocurrency.
- The buyer reports fraud.
- The payment is reversed, the cryptocurrency is gone.
Overpayment Scam:
- They pay a "larger amount" than required.
- They pressure you to refund the money.
- The original payment is reversed.
How to protect yourself:
- Only use escrow services.
- Confirm payment inside the app (not via SMS).
- Wait for full confirmation.
- Never refund money—tell them to contact the platform.
Phishing Scams
What it is: Fake websites/messages that steal your information.
Example:
- Fake exchange login pages.
- "Security alert" emails.
- Impersonating a customer service person.
How to protect yourself:
- Save legitimate websites in your bookmarks.
- Don't click links in emails.
- Enable two-factor authentication (2FA) everywhere.
- Verify the address (URL) carefully.
SIM Swap
What it is: An attacker takes control of your phone number.
Impact:
- Two-factor authentication (2FA) can be bypassed.
- Exchange accounts can be compromised.
- The M-Pesa account can be accessed.
How to protect yourself:
- Use authentication apps (not two-factor authentication via SMS).
- Lock your phone number with a password.
- Receive notifications of account activity.
- Reduce reliance on phone-based authentication.
Malware
What it is: Software that steals or hijacks data.
Types:
- Programs that swap addresses (clipboard hijackers).
- Programs that record passwords (keyloggers).
- Screen capture programs that capture secret phrases.
How to protect yourself:
- Keep your system updated.
- Use secure antivirus software.
- Don't download suspicious files.
- Verify the address after copying.
Legal and Regulatory Risks
Account Closure
What it is: A bank closing an account because of cryptocurrency activity.
Why it happens:
- A bank policy against cryptocurrency.
- An unusual transaction pattern.
- Following Central Bank of Kenya (CBK) directives.
Impact:
- Funds frozen.
- Being forced to provide explanations.
- Difficulty opening a new account.
How to avoid it:
- Use M-Pesa mainly.
- Make sure your bank activities aren't connected to cryptocurrency.
- Don't discuss cryptocurrency with the bank.
- Get backup accounts.
Regulatory Changes
What it is: Laws being changed to restrict cryptocurrency.
Possible outcomes:
- A trading ban.
- Large transactions being reported.
- Tax obligations being clarified.
- Exchanges being required to be licensed.
How to avoid it:
- Don't rely on cryptocurrency alone.
- Make sure you have records of all your transactions.
- Stay informed about laws and regulations.
- Get traditional alternatives.
Tax Obligations
What it is: Tax obligations you didn't expect.
Risks:
- The introduction of a new cryptocurrency tax.
- Past transactions becoming subject to tax.
- A lack of transparency in record-keeping.
How to avoid it:
- Make sure you have detailed records.
- Consult a tax professional.
- Set aside extra money to pay tax if required.
Operational Risks
Platform Failure
What it is: A platform or service disappearing or being shut down.
Example:
- Platform collapse (FTX, Mt. Gox)
- Platform insolvency
- Technical problems
Impact:
- Funds lost or blocked
- Failure to complete the transfer
- A long recovery process
How to reduce it:
- Only use proven platforms
- Don't leave a large amount on platforms
- Move quickly, don't hold
Counterparty Risk
What it is: A counterparty in a peer-to-peer (P2P) trade not honoring their promise.
Example:
- A buyer disappearing after receiving the cryptocurrency
- A seller not releasing goods from escrow
- Disputes dragging on for a long time
How to reduce it:
- Trade with users who have good reputations
- Use an escrow system every time
- Record everything
- Start with a small amount
Network Congestion
What it is: A blockchain network having heavy activity.
Impact:
- Slow confirmations (now taking hours instead of minutes)
- Higher fees than expected
- Transfers getting stuck
How to reduce it:
- Check network status before sending
- Pay an appropriate fee
- Avoid Bitcoin during high-activity periods
- Use faster networks (Tron, etc.)
Real Examples of Disasters
Losing Funds
"I sent USDT to the recipient's address but I used the wrong network. I lost $800."
Lesson: Always make sure a matching network is used.
A Look at a P2P Scam
"I released Bitcoin after seeing an SMS message from M-Pesa. It was fake. I lost $500."
Lesson: Check payment in the M-Pesa app, not in an SMS.
Bank Problems
"The bank closed my account after I made regular deposits from P2P trading."
Lesson: Use M-Pesa for P2P trading, not bank accounts.
Risk Comparison: Cryptocurrency vs. Traditional Services
| Risk | Cryptocurrency | Traditional Services |
| Volatility | High | None |
| Sending money to a wrong address | Very risky | Can be corrected |
| Scams | Frequent | Rare |
| Platform failure | Possible | Rare |
| Regulation | Unstable | Clear |
| Consumer protection | None | Exists |
| Possibility of losing all your money | Yes | Very rare |
Those Who Should Not Use Cryptocurrency
- Those who are sending remittance money for the first time.
- Those who send critical payments (healthcare, school fees).
- Users who don't understand the technology.
- People who are risk-averse.
- Anyone who depends on the certainty of that money arriving.
Those Who CAN Use Crypto (With Caution)
- Experienced crypto users.
- Small, not-too-important amounts.
- Those who have backup plans.
- Where conventional methods aren't available.
- For testing/educational purposes.
Conclusion
The risks of using cryptocurrency for remittances are real:
- Financial loss due to price changes and fees.
- Technical errors are unrecoverable.
- Security risks are frequent.
- Laws can change.
- There is no protection if things go wrong.
For most people who send money to Kenya, traditional services are safer, easier, and often cheaper.
Find reliable options on our comparison page.