Kenya Takes First Step to Regulate Virtual Asset Market

The Kenyan government is all set to take the first step to regulate a vast $20 Billion crypto market under the provisions of the Finance Act 2023. 

Kenya’s parliament has obligated the Blockchain Association of Kenya (BAK) to design a draft of the strict legal framework for cryptocurrency service providers. These regulations will be launched as the official crypto bill. All virtual asset service providers, crypto exchange, trading, or investing platforms should comply with these crypto AML measures to operate in Kenya. This will comply with the international standards to collaborate with global regulatory authorities in financial crimes. It also supports the country’s law enforcement agencies to combat money laundering and terrorist financing. The decision to develop a crypto bill was obligated in the meeting with the National Assembly Committee on Finance and National Planning. 

Previously, BAK amended Kenya’s Finance Act and opposed Digital Asset Tax (DAT) in August 2023, which discloses the vast amount of crypto transactions in Kenya from 2021 to 2022. Kenya is the third high-ranked country in Africa involved in crypto transactions and 21st in the global list of countries that have adopted cryptocurrencies. The latest meeting with the National Assembly committee was arranged to enable BAK’s discussion with the members and enhance the collaboration on designing the crypto bill. It accelerates law enforcement agencies to shape adequate regulations and supervise crypto platforms. BAK, alongside international standards such as robust framework, consumer protection, anti-money laundering (AML), and counter-terrorism financing (CFT). 

The National Assembly assigned BAK 2 months to draft a crypto bill and present it to the committee. In this crypto bill, the committee has mentioned that the BAK should find the gaps in the asset industry and analyse the risk assessment on crypto platforms. It will support law enforcement agencies in the future and can update the regulations according to predictions. It also creates AML derivatives that financial institutes must uphold before onboarding licensed crypto platforms. The National Assembly will also create a separate committee to assist the BAK in implementing the crypto bill. 

Moreover, BAK’s pledge to draft a legal framework for digital assets, including tax association and revenue guidelines, whilst the same effort is going in the South African Financial Sector Conduct Authority and Mauritius Virtual Assets and Initial Tokens Offering Service Act 2021, which will boost Africa’s crypto trading market.

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