The cryptocurrency market in Kenya has experienced exponential growth, with transactions reaching nearly $20 billion (KES 3 trillion) between July 2021 and June 2022.
Recognizing the significance of this emerging sector, Kenya’s parliament has mandated the Blockchain Association of Kenya (BAK) to spearhead the creation of the Virtual Asset Service Provider’s Bill, colloquially known as the Crypto Bill.
This move follows BAK’s active involvement in discussions with the National Assembly Committee on Finance and National Planning, where it initially opposed the Digital Asset Tax provision in the Finance Act of 2023.
Kenya’s Crypto Landscape
Kenya has become a key player in the global crypto arena, ranking third in Africa for crypto site traffic and 21st in global crypto adoption.
The parliamentary decision to involve BAK in drafting the Crypto Bill reflects a growing recognition of the need for comprehensive regulations to govern cryptocurrency and digital assets.
BAK’s Role and Collaborative Efforts:
During the recent meeting with the National Assembly Committee, BAK collaborated with major industry stakeholders, including Binance, Yellow Card, Kotani Pay, and the Law Society of Kenya (LSK).
Together, they presented essential components for a robust regulatory framework.
These elements encompass a clear licensing structure, a tax framework, consumer protection measures, anti-money laundering (AML) and counter-terrorism financing measures, and the establishment of a regulatory sandbox.
Parliament’s Unprecedented Move:
In a unique development, the parliamentary committee directed BAK to draft and submit the bill governing digital assets within a two-month timeframe.
This bold move signifies a recognition of the knowledge gap that has historically impeded effective regulation of the crypto asset class.
The directive also marks an unprecedented instance of a parliamentary committee instructing an association to draft a bill for adoption.
Aligning with Global Trends:
Kenya’s decision to formulate a digital asset regulatory framework mirrors efforts in other African countries like South Africa, Nigeria, and Mauritius, which lead the continent in crypto market values at $25 billion, $19 billion, and $3 billion, respectively.
These countries have implemented regulatory measures through entities such as the Financial Sector Conduct Authority, Finance Act 2023, SEC Regulations on Digital Assets, and the Virtual Asset and Initial Token Offering Services Act 2021.
As Kenya ventures into crafting its crypto regulations, the collaboration between BAK and the National Assembly Committee represents a significant step towards creating a conducive environment for the growth of the crypto market.
The proposed framework, encompassing licensing, taxation, consumer protection, and anti-money laundering measures, aims to strike a balance between fostering innovation and ensuring responsible practices within the burgeoning digital asset sector.
