Kenya is preparing new laws to govern cryptocurrency trading, including Bitcoin and other digital assets.
The move comes after years of restrictions on digital currencies in Kenya. Despite a 2015 ban by the Central Bank of Kenya, underground trading continued, demonstrating the demand for regulated crypto use. A UN report in 2022 revealed that 10% of Kenyans own cryptocurrency, underlining its growing adoption.
Now, the government is preparing a legal framework to regulate Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs). The legislation will aim to address risks like money laundering and fraud while creating a structured market for digital assets.
Treasury Cabinet Secretary John Mbadi announced the development of the new laws. He said that the government’s aim is to balance innovation with risk management, ensuring a safe environment for users.
“We want to ensure that we have a vibrant sector that is also safe for users. We are working on a legal framework to govern cryptocurrency trading, including Bitcoin and other digital assets,” Mbadi stated.
Kenya has a legacy of financial innovation, starting with Safaricom’s M-Pesa in 2007, which revolutionized mobile money. This foundation positions the country as a leader in adapting to new technologies. The legal framework for cryptocurrency is expected to draw from these experiences to enhance financial systems.
The regulations will focus on tackling risks such as money laundering, cybercrime, and tax evasion. In September 2023, Kenya completed its National Risk Assessment Report on VAs and VASPs, identifying key threats.
The Draft National Policy on Virtual Assets and VASPs will shape the future of crypto regulation in Kenya. It is designed to establish clear rules for managing digital assets and mitigating risks. The policy aims to protect consumers while promoting compliance with international financial standards.
The draft will also address gaps in the current system, ensuring fair practices and reducing the potential for financial crimes. Above all, the government is committed to creating a framework that aligns with global trends in digital finance.
