Bitcoin [BTC] adoption in Kenya has surged, even in informal settlements

This summarizes the BTC and crypto's financial inclusion use case, especially in regions with low banking access.

Bitcoin [BTC] adoption in Kenya has surged, even in informal settlements, with its traction now facing risk ahead of a key regulatory framework.

According to a recent ABC News report, select local merchants and community workers are now accepting BTC payments. When asked the reasons behind opting for Bitcoin, one grocery seller said,

“I like it because it’s cheap, fast, and has no transaction costs.”

Another community worker helping with waste management added that he prefers BTC payments because it’s safer, citing the high crime rate in the slum.

This summarizes the BTC and crypto’s financial inclusion use case, especially in regions with low banking access.

Unfortunately, this enthusiasm and growth may falter with a 1.5% crypto tax proposal in the Virtual Asset Service Providers (VASP) Bill 2025.

Will Kenya’s crypto bill affect BTC adoption?The bill, according to regulators, would offer the needed clarity in the sector that has seen an influx from global players like Binance, Bybit, and Bitget.

However, the bill also slaps a flat 3% Digital Asset Tax (DAT) on all crypto transactions, regardless of whether you make a profit or loss.

Though there has been a 50% tax cut proposal to 1.5% DAT, experts have cautioned that the levy could push traders offshore and stifle innovation, drawing parallels to India and Indonesia.

In a CNBC interview, Rufas Kamau, Lead Market Analyst at a regional broker FXPesa,

“If you’re doing 10-20 trades daily and paying 3% on each transaction, you’ll make no money as the government will take nearly everything.”

A similar 1% crypto tax in India saw trading volume drop by nearly 90%. In fact, Indian crypto industry players have reportedly reached out to regulators to cut the tax to 0.1% to boost the sector.

The same fate may befall Kenya, a country boasting 6 million crypto users (10% of the population). According to Chainalysis’ crypto adoption index, Kenya is ranked 21st out of 155 countries, making it one of Africa’s largest BTC and crypto markets alongside Nigeria and South Africa.

However, these users may opt for peer-to-peer (P2P) and unregistered offshore platforms if the 1.5%-3% tax is adopted. Besides, the hefty tax surpasses the local mobile payment, M-Pesa, which charges 0.04% to 1% of the total amount sent.

Bitcoin has offered Kenyans a safer, cheaper, and instant payment alternative. However, the country’s proposed crypto bill could affect its adoption.