Kenya is advancing its regulatory framework for cryptocurrencies by drafting new legislation, inviting public feedback until January 24. This marks a significant policy shift as the country moves away from previous cautionary stances issued by the Central Bank of Kenya. On January 10, Treasury Cabinet Secretary John Mbadi announced that the government aims to establish a legal and regulatory infrastructure for cryptocurrencies.
The proposed framework, titled “National Policy on Virtual Assets and Virtual Asset Service Providers,” seeks to create a fair, competitive, and stable market environment for cryptocurrencies in Kenya. It addresses potential risks, including money laundering, terrorism financing, and issues related to consumer protection.
The draft policy outlines intentions to develop comprehensive legal standards governing virtual asset activities and the operations of virtual asset service providers. If adopted, Kenya could align itself with other African countries such as South Africa and Nigeria, which have already put crypto regulations into place.
Historically, Kenya has maintained a cautious stance on cryptocurrencies. In December 2015, the Central Bank of Kenya issued a public notice advising against their use due to concerns over fraud and the lack of legal protections. However, a significant development occurred in September 2023 when Kenya completed a risk assessment on money laundering and terrorism financing associated with virtual assets, advocating for regulatory measures to tackle these risks.
Kenya is positioning itself strategically within the Sub-Saharan Africa region where cryptocurrency adoption is on the rise. Stablecoin transactions form a substantial portion of the region’s crypto activity, driven by currency devaluation issues. Between July 2023 and July 2024, Kenya processed $3.3 billion in stablecoin transactions, putting it behind Nigeria and South Africa regarding transaction volumes. As the country moves forward with regulatory measures, it reaffirms its commitment to becoming a key player in the regional digital asset landscape.
