The Kenyan National Treasury and Economic Planning has unveiled a draft policy to shape the country’s approach to virtual assets and virtual asset service providers (VASPs).
It’s inviting public input and organizing forums to refine its cryptocurrency regulatory strategy.
Why it matters
Kenya is a leader in East Africa’s crypto scene but lacks a unified legal framework to guide virtual asset usage. This move signals a significant step toward clarity and regulation in a space often mired in uncertainty.
Driving the news
- The draft, dated December 2024, outlines Kenya’s evolving stance on crypto, from a soft ban in 2015 to repeated warnings about the risks of dealing with unregulated virtual assets.
- The document acknowledges challenges, including vague definitions of virtual assets, unclear legal status, and fragmented oversight among government agencies like the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA).
Details
- Kenya plans to model its regulations on standards set by international bodies such as the Financial Action Task Force (FATF), the Financial Stability Board, and the International Monetary Fund (IMF).
- The country is also studying regulatory approaches in jurisdictions like the UK, US, France, Singapore, Nigeria, and the EU.
- Recommendations include:
- A comprehensive legal framework for virtual assets aligned with anti-money laundering (AML) and countering the financing of terrorism (CFT) standards.
- A requirement to review regulations every 10 years to keep pace with industry developments.
Public participation
The Treasury is seeking feedback on the draft, with submissions due by January 24, 2025. Public forums will be held nationwide from January 20 to 29.
What they’re saying
“The Government of Kenya is committed to creating the necessary legal and regulatory framework in order to leverage opportunities presented by VAs and VASPs while managing the resultant risks,” said Hon. FCPA John Ng’ongo, Kenya’s Cabinet Secretary for National Treasury and Economic Planning.
The big picture
Kenya’s regulatory journey has been turbulent:
- 2015: The CBK discouraged financial institutions and the public from engaging in cryptocurrencies due to regulatory gaps.
- 2023: A Digital Asset Tax (DAT) was introduced, imposing a 3% levy on gross income from virtual asset trades, adding to existing taxes like income tax, capital gains tax, and value-added tax.
- 2023: The controversial Worldcoin decentralized identity protocol faced suspensions, equipment seizures, and legislative probes. Although operations resumed in 2024, the regulatory terms remain unclear.
Zoom out
Despite regulatory hiccups, Kenya remains a crypto powerhouse in East Africa and ranks among the top five crypto markets by volume in Africa.
This draft policy marks a potential turning point for structured and sustainable engagement with virtual assets.
Source: Mariblock
