Kenya Moves Forward with Cryptocurrency Regulation in New Bill

• Kenya Cryptocurrency Regulation: Measures to Mitigate Financial Risks.
• Crypto Growth in Kenya: Competitive and Stable Market Developing.
• Kenya leads crypto innovation in Africa with new regulatory policies.

The Kenyan government is taking steps to regulate and legalize the use of cryptocurrencies. Recently, the National Treasury released a draft policy that sets the foundations for a future regulatory framework in the digital assets sector.

According to John Mbadi Ng'ongo, Secretary of Treasury and Economic Planning, the government's intention is to take advantage of the opportunities offered by cryptocurrencies and virtual asset service providers (VASPs), while mitigating the risks associated with the sector. He stated:

“This policy guides the establishment of a solid legal and regulatory framework, providing the fundamental basis for a fair, competitive and stable market for virtual assets and service providers, with the aim of fostering innovation, improving financial education and ensuring effective risk management.”

This bill represents a significant shift in the Kenyan government’s stance on cryptocurrencies. In 2015, the Central Bank of Kenya warned against the use of digital assets such as Bitcoin (BTC), noting that they were not recognized as legal tender and did not offer government protection.

Even in the absence of regulation, cryptocurrency usage in Kenya has grown considerably in unregulated spaces. According to local media, the draft, titled “National Policy on Virtual Assets and Virtual Asset Service Providers,” aims to create a stable and competitive market by addressing concerns such as money laundering, terrorist financing, and consumer protection.

The document also proposes the development of standards and procedures to regulate virtual asset activities and service providers. The deadline for public feedback is January 24, and if approved, Kenya will join African countries such as Nigeria and South Africa that already have regulations for the sector.

The change reflects a risk analysis carried out in 2023, which recommended regulating activities involving crypto assets to strengthen the fight against money laundering and terrorist financing.

Data from Chainalysis’ 2024 report highlights that Kenya ranks 21st in the Global Cryptocurrency Adoption Index, demonstrating the country’s potential in the digital economy. Stablecoin transactions account for nearly half of the region’s total volume, indicating their popularity amid the depreciation of local currencies.