Kenya is poised to become a leader in shaping the future of cryptocurrency in Africa. This is evident in the Blockchain Association of Kenya‘s (BAK) initiative to draft the country’s first-ever “Virtual Asset Service Provider (VASP)” bill, designed to regulate the burgeoning digital asset market.
BAK, an advocate for digital asset policy, unveiled the draft bill on January 22nd, 2024, sparking diverse reactions from industry stakeholders.
This initiative follows a mandate given by Kenya’s parliament in October 2023, seeking a regulatory framework by February 14th.
Prior to this, BAK challenged the Digital Asset Tax (DAT) imposed in the 2023 Finance Act.
Kenya boasts a substantial crypto market, ranking third in Africa for website traffic and 21st globally in adoption.
According to International Monetary Fund (IMF), “Africa is one of the fastest-growing crypto markets in the world, according to Chainalysis, but remains the smallest, with crypto transactions peaking at $20 billion per month in mid-2021. Kenya, Nigeria, and South Africa have the highest number of users in the region. Many people use crypto assets for commercial payments, but their volatility makes them unsuitable as a store of value.”
The proposed bill aims to address challenges like fraud, entry barriers for startups, and restrictive taxation. It proposes licensing requirements, a consumer protection framework, and anti-money laundering (AML/CTF) provisions.
Kenya’s position as a hub for digital assets is under threat, warns Allan Kakai, legal and policy director of the BAK. In a statement, Kakai emphasized that without clear regulations, neighboring African countries like Nigeria, South Africa, Botswana, Namibia, and Mauritius are poised to steal the lead.
BAK said it welcomes feedback from all interested parties until February 7th, 2024.
The revised draft will be submitted to the National Assembly’s Finance Committee on February 14th.
It is foreseen that Kenya’s leadership in crypto regulation could attract significant foreign direct investment and boost economic recovery.
Digital asset regulation remains a hot topic across Africa, with countries like Nigeria and South Africa already enacting laws.
Kenya’s initiative aligns with these efforts, potentially placing it in a prime position to capitalize on the digital asset market.
Kenya’s proactive approach to crypto regulation reflects its commitment to harnessing the potential of this emerging technology while ensuring responsible development.