Kenya is taking steps towards regulating cryptocurrencies, with the government forming a multi-agency team that includes the central bank to develop rules and oversight for virtual assets and Virtual Asset Service Providers (VASPs), as reported by local outlet NTV Kenya on Monday.
The establishment of this group was revealed by Kenyan National Treasury Cabinet Secretary Prof. Njuguna Ndung’u to the National Assembly. This move comes in response to warnings from regulators regarding unlicensed virtual asset products and a risk assessment by the Central Bank highlighting concerns about money laundering and terrorist financing associated with cryptocurrencies.
Kenya’s 2022 anti-money laundering report identified virtual assets and VASPs as areas requiring attention. Additionally, Kenyan authorities uncovered suspicious M-Pesa withdrawals totaling at least $20 million injected into the economy in 2023, linked to the now-suspended iris-scanning project Worldcoin.
Kenya’s Proposed Crypto Regulation Bill
Kenya has witnessed significant cryptocurrency activity and interest, ranking among the top five markets in Africa. However, it trails behind Nigeria in terms of total cryptocurrency ownership, with approximately 4.4 million holders.
The country’s approach to cryptocurrency regulation appears to be evolving, with the parliament actively engaging in discussions and projects related to crypto in 2023. This led to the approval of the Capital Markets (Amendment) Bill, 2023 by the National Assembly’s committee in December. If passed, this bill would introduce taxation on crypto exchanges and wallets, akin to traditional bank transactions, marking a significant shift in Kenya’s approach to crypto regulation.