Kenya is poised to become a trailblazer in the world of cryptocurrency regulation, with industry representatives taking the lead in developing a groundbreaking regulatory framework for digital assets. The Blockchain Association of Kenya (BAK) has been entrusted with the task of drafting what could become the “virtual asset service provider’s bill” by the National Assembly’s Departmental Committee on Finance and National Planning.
This significant development unfolded during a meeting on October 31 when the Committee on Finance and National Planning invited BAK representatives to engage in discussions on the regulation of digital assets. Allan Kakai, BAK’s legal and policy director, shed light on the meeting’s essence, emphasizing Kenya’s position as a digital asset hub within Africa:
“Basically, we are telling [the] parliament: ‘Look, Kenya has always branded itself as the Silicon Savannah; we are top three for digital assets [volume in Africa], and if we do not develop a clear licensing and regulatory framework, Nigeria, South Africa, Botswana, Namibia, Mauritius would take the lead, and the capital flow that would have come to Kenya would have flocked elsewhere.”
In response to BAK’s call for a regulatory framework, the committee granted them a two-month timeline to draft the cryptocurrency bill. The committee’s official account on the social media platform X (formerly Twitter) noted that it urged the association to conduct extensive public education on cryptocurrency trading to dispel misconceptions.
In September 2023, Kenya introduced the Financial Act 2023, which included a provision requiring cryptocurrency exchanges to withhold 3% of the transfer or exchange value of digital assets. This tax measure faced resistance from BAK, which filed a complaint against it in the High Court of Kenya, although it was unable to dissuade lawmakers from passing it in May.
Kenyan authorities have also taken a strict stance against the controversial digital ID crypto project Worldcoin, co-founded by Sam Altman, the CEO of OpenAI. A parliamentary committee in Kenya’s government recommended shutting down the project’s operations in the country, citing concerns over the harvesting of personal data. Kenya’s evolving stance on cryptocurrency regulation and its active involvement of industry stakeholders demonstrate its commitment to shaping the future of digital assets within its borders.
