Kenya Takes Aim At Crypto Regulation

In an effort to adopt a more inclusive approach toward the crypto industry, the Kenyan government through its National Treasury and Economic Planning Department has called for public consultation on its proposed regulatory structure.

Kenya is taking steps to establish a legal framework for cryptocurrency operations, following a recommendation by the International Monetary Fund (IMF) to overhaul its existing crypto policy.

The Kenyan government, through its National Treasury and Economic Planning Department, has called for public consultation on its proposed regulatory structure.

Two documents will form the basis of the consultations: "The Draft National Policy On Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs)" and "The Virtual Asset Service Providers Bill, 2025."

The first document aims to guide the governance of VAs and VASPs, while the second will designate regulatory authorities and licensing requirements for VASPs.

Public consultations on both documents will run till January 24, inviting input from Kenyans and stakeholders on the proposed crypto framework.

Kenya's central bank banned cryptocurrencies as legal tender in 2015, but crypto ownership remains high, with an estimated 2.8 million Kenyans.

The government's move to legalize virtual assets marks a significant shift from its previous anti-crypto stance.

According to local media The Saturday Standard, Cabinet Secretary for Treasury & Economic Planning John Mbadi highlighted the changing policy landscape.

"The emergence and growth of Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs) have given rise to innovations in the local and international financial system with dynamic opportunities and challenges," Mbadi said.

The Cabinet Secretary acknowledged the risks associated with the crypto industry, such as fraud and money laundering, but expressed confidence that these can be mitigated through effective regulation.

Kenya's U-turn on crypto comes after the IMF's technical assistance report, which advised Kenya to strengthen its crypto regulation by adopting a clear legislative framework and ensuring consumer protection through financial literacy, among other recommendations.

At press time, the crypto market cap stands at $3.21 trillion, having lost 0.55% over the last 24 hours.