Kenya is forging ahead with plans to regulate the crypto industry, with a request for public participation published in local newspapers.
The request is published by the Cs John Mbadi Led Ministry of National Treasury and Economic Planning, and is seeking public opinion on 2 documents.
According to the ministry, the documents have been developed through a multi-agency taskforce and both provide a framework for oversight and development of the virtual assets ecosystem.
“Pursuant to Sections 4(a) and 5(3) (a) and (b) of the Statutory Instruments Act, 2013, the National Treasury and Economic Planning is undertaking public participation on the Policy and the Bill and hereby invites the members of the public to submit their views to the email address pstnt@treasury.go.ke and copied to vasps@treasury.go.ke on or before 24th January 2025 using the template provided on the National Treasury website.” the ministry states.
This move comes as the International Monetary Fund (IMF) warned that Kenya is falling behind in regulating the industry.
The proposed bill could solve a legal grey area that has prevented banks from engaging with cryptocurrencies in the country. It also presents an opportunity for crypto exchanges like Binance, which operate without formal regulatory approval.
“The policy and the bill provide a framework for oversight and development of the virtual assets ecosystem,” the National Treasury said in a notice. The National Treasury is undertaking public participation on the policy and the bill and hereby invites members of the public to submit their views.”
The ministry will be conducting public participation forums in various physical locations across the country.
Members of the public are invited to come and give their views on the two documents in the following locations:
1. Mombasa City.
Date: January 20 2025
Target Counties: Mombasa, Kwale, Kilifi, Tana River, Lamu, and Taita Taveta
Time: 9:00 AM – 1:00 PM
2. Kisii.
Date: January 20 2025
Target Counties: Kisii, Migori, Homabay, and Nyamira
Time: 9:00 AM – 1:00 PM
3. Machakos.
Date: January 22 2025
Target Counties: Machakos, Kitui, Makueni, and Kajiado
Time: 9:00 AM – 1:00 PM
4. Kisumu City.
Date: January 22 2025
Target Counties: Kisumu, Siaya, Busia, Vihiga, Kakamega, Bungoma, and Kericho
Time: 9:00 AM – 1:00 PM
5. Nyeri.
Date: January 24 2025
Target Counties: Nyeri, Embu, Tharaka Nithi, Murang’a, and Kirinyaga
Time: 9:00 AM – 1:00 PM
6. Eldoret.
Date: January 24 2025
Target Counties: Uasin Gishu, West Pokot, Trans Nzoia, Nandi, Bomet, Elgeyo Marakwet, and Turkana
Time: 9:00 AM – 1:00 PM
7. Meru.
Date: January 27 2025
Target Counties: Isiolo, Wajir, Mandera, Marsabit, Garissa, and Meru
Time: 9:00 AM – 1:00 PM
8. Nakuru.
Date: January 27 2025
Target Counties: Nakuru, Laikipia, Narok, Nyandarua, Samburu, and Baringo
Time: 9:00 AM – 1:00 PM
9. Nairobi.
Date: January 29 2025
Target Counties: Nairobi and Kiambu
Time: 9:00 AM – 1:00 PM
The East African nation, Kenya, lags behind the advanced crypto ecosystems on the continent when it comes to regulation.
Nigeria has a regulation regime in place introduced in June 2024 with Nigerian-owned crypto exchanges, Busha and Quidax, the first to receive licenses from the Nigerian SEC in 2024.
Kenya’s financial sector is regulated by the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA). While the CMA has softened its stance on virtual assets, the CBK has maintained a firm position, repeatedly warning banks against engagement with virtual currencies.
However, the Government is changing tune as it moves to capitalize on the financial gains from the Digital Currencies sector.
The Kenya Revenue Authority (KRA) collected Sh10 billion in taxes from 384 cryptocurrency traders in the financial year ended June 2024, marking the first time the crypto industry has contributed to Kenya's national tax basket.
Despite a lack of a proper framework for tracking transactions and a Central Bank of Kenya advisory cautioning against doing business with crypto entities, the KRA aims to collect Sh60 billion from the sector by working with the central bank and engaging with crypto dealers.
The Finance Act of 2023 introduced a 3% tax on digital asset transfers, but implementation has been challenging.
The KRA plans to integrate a new revenue system with crypto exchanges to track transactions in real-time, as the country's crypto industry is estimated to have transacted Sh2.4 trillion between 2021 and 2022, nearly 20% of Kenya's GDP.
Kenya is one of the most active crypto markets globally, with an estimated 729,200 cryptocurrency owners. The potential Sh60 billion gain from taxing crypto dealers could fund the KRA's entire expenses for a year, highlighting the significance of the sector.
The KRA is working to develop a system to effectively track and collect taxes on cryptocurrency transactions.