- As Africa”s cryptocurrency market evolves, the Kenyan government has formed a multi-agency technical working group to regulate operations.
- This comes about a year after the government, through the Kenya Revenue Authority (KRA), announced plans to receive 3% of the revenue generated by citizens trading digital assets.
- The technical team, which includes the Central Bank of Kenya, has been tasked with creating a regulatory and monitoring framework for using cryptocurrencies known as virtual assets (VAs) and other digital asset services known as virtual asset service providers (VASPs).
According to the National Treasury Cabinet Secretary, Njuguna Ndung’u, “Due to the emergence of online marketing of virtual assets and online fraudulent investment options, CBK and other financial sector regulators issued notices warning the public against the use of unlicensed financial products and services.”
Remember that in September 2023, the CBK’s Financial Reporting Centre (FRC) conducted a risk assessment on virtual assets (VAs) and virtual asset service providers (VASPs) in terms of money laundering and terrorism financing.
The assessment recommended regulations to address several risks, including money laundering, terrorism financing, consumer protection, data privacy, and governance.
Kenya is said to be the largest cryptocurrency market in East Africa, with the highest volume and interest in the sub-region, ranking it among Africa’s top cryptocurrency markets.
The Kenyan cryptocurrency community reacted strongly when the country announced plans to levy a 3% tax on digital asset trading. The Blockchain Association of Kenya (BAK) has also filed a petition with the High Court of Kenya, questioning the legality and constitutionality of this action.
Following the Kenyan parliament’s request that a community-based NGO develop a first draft of the crypto bill, in February 2024, the Blockchain Association of Kenya (BAK) drafted the country’s first Virtual Assets Service Provider (VASP) bill to regulate Kenya’s digital asset market.
Subsequently, in the same month, the Directorate of Criminal Investigations (DCI) cautioned Kenyans over online cryptocurrency scamming schemes that have led to some losing their money to fraudsters.
The DCI revealed in 2023 that a transaction, allegedly violating the Crime and Anti-Money Laundering Act, involved irregular pumping of at least KSh 2.5 billion (roughly $18 million) into the economy through Mpesa withdrawals. These payments were made to Kenyans whose irises were scanned by Worldcoin cryptocurrency before its suspension.
Meanwhile, in August 2023, the Kenyan government suspended Worldcoin’s operations. Despite recent pressure from the United States, the suspension has not been lifted.