The Republic of Kenya is currently taking steps to create a legal framework for crypto operations. Interestingly, this very exciting development comes shortly after the International Monetary Fund (IMF) suggested that the East African country overhaul its current crypto policy and bring it in line with global standards.
Kenya Takes Aim at Crypto Regulation
In an effort to implement an inclusive approach to the crypto industry, the Kenyan government through the Ministry of National Finance and Economic Planning has called for public consultation on its proposed regulatory structure.
This framework focuses on two documents, one of which is “The Draft National Policy On Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs)” which aims to guide the governance of VAs and VASPs and ensure a fair and efficient market for all stakeholders among others objectives.
The second document is a proposed law called the “Visual Assets Service Provision Bill, 2025” which focuses on the designation of regulatory authorities and licensing requirements for VASPs. The bill will also highlight the general responsibilities of VASPs in relation to preventing money laundering, terrorist financing and money laundering.
Public consultation on both documents will continue until January 24, before all Kenyans and stakeholders are invited to submit their views on the proposed crypto framework.
Kenya Willing to Reverse Anti-Crypto Stance
In 2015, the Central Bank of Kenya issued a warning about the use of cryptocurrencies as they prohibited their use as legal tender. However, the movement of digital assets remains strong in the East African nation as about 2.8 million Kenyans own crypto.
With calls for public consultation on the proposed crypto regulatory structure, the Kenyan government appears ready to embrace the potential of this emerging industry.
Commenting on this sudden move to legalize physical assets, the country’s Cabinet Secretary for Finance & Economic Planning, John Mbadi indicates a major change in policy. According to the local media Saturday Standard, Mbadi said:
The emergence and growth of Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs) has resulted in the creation of domestic and international financial systems with strong opportunities and challenges.
The Cabinet Secretary is also aware of the current plight of the crypto industry including fraud, money laundering etc., but believes that these risks can be contained by an effective regulatory system.
As mentioned earlier, Kenya’s U-turn on crypto comes soon after being influenced by the IMF. In a technical assistance report, the United Nations financial agency advised Kenya to increase its crypto regulation by adopting a clear legal framework, and ensure consumer protection through financial information among other recommendations.
At the time of publication, the crypto market cap is estimated at $3.21 trillion following a loss of 0.55% the previous day.
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