Kenya is initiating efforts to regulate cryptocurrencies, with the government forming a multi-agency team that includes the central bank.
The group will develop rules and oversight for cryptocurrencies (also known as virtual assets) and the companies that trade them (virtual asset service providers), local outlet NTV Kenya reported Monday.
Kenya ‘s Treasury Cabinet Secretary, Prof. Njuguna Ndung’u, revealed to the National Assembly the formation of a multi-agency working group. This follows warnings from regulators about unlicensed virtual asset products and a risk assessment by the Central Bank that highlighted concerns about money laundering and terrorist financing.
The assessment highlighted the money laundering and terrorist financing potential associated with virtual assets, emphasizing the need for regulatory measures. Kenya’s Anti-Money Laundering Report 2022 identified virtual assets and virtual asset service providers as areas of concern.
What’s more, Kenyan authorities discovered that at least $20 million flowed into the economy in 2023 as a result of suspicious M-Pesa withdrawals. These transactions have been linked to the now-suspended iris-scanning Worldcoin project.
Kenya’s proposed law aims to regulate the cryptocurrency market
Kenya boasts the largest cryptocurrency activity and interest in the East African region. It even ranks among the top five largest markets on the continent. However, the country lags behind Nigeria in terms of total cryptocurrency ownership, with about 4.4 million holders.
Kenya’s approach to regulating cryptocurrencies appears to be evolving. After a period of negative attitudes, the country’s parliament has actively engaged in discussions and projects related to cryptocurrencies in 2023.
This culminated in the approval of the Capital Markets (Amendment) Bill 2023 by a National Assembly committee in December. The bill, if passed, will significantly change Kenya’s approach to cryptocurrencies, introducing taxation of cryptocurrency exchanges and wallets, similar to traditional banking transactions.
