Kenya’s massive $20 billion crypto market is moving closer to regulation. The country’s parliament has directed the Blockchain Association of Kenya (BAK) to prepare the initial draft of a Virtual Asset Service Provider’s Bill to govern cryptocurrencies.
This landmark development comes after BAK’s second appearance before the National Assembly’s Finance Committee on October 31st. During the engagement, BAK was asked to submit a regulatory framework within two months, marking an unprecedented instance of parliament instructing an association to draft legislation.
The bill coincides with surging crypto adoption in Kenya, with nearly $20 billion in transactions occurring between July 2021-June 2022. Kenya ranks third in Africa and 21st globally for crypto site traffic.
The draft bill seeks to establish a clear licensing system, tax guidelines, consumer protections, and anti-money laundering measures for virtual assets. Input was provided by BAK, Binance, Yellow Card, Kotani Pay and the Law Society of Kenya during the parliamentary committee meeting.
Kenya’s approach mirrors efforts in other leading African crypto markets like South Africa, Nigeria, and Mauritius. These countries have taken steps to integrate digital asset regulation, reflecting wider recognition of cryptocurrencies as a new financial instrument.
While cryptocurrency is already taxed in Kenya under the Finance Act 2023, comprehensive regulation is still lacking. By tapping BAK’s specialised expertise to shape the draft law, parliament is acknowledging knowledge gaps and prioritising balanced, informed crypto oversight.
The submission of BAK’s bill in early 2023 will be a landmark step for the nascent crypto industry. With clear rules and security guidelines, regulators can curb illicit activities while allowing innovation to flourish. For Kenyan consumers and businesses, detailed regulation grants much-needed clarity and protection when using virtual assets.
As a pioneer in Africa’s blockchain space, Kenya is cementing its position as a model for prudent crypto adoption. The collaborative drafting process will likely produce regulation that balances innovation with responsible oversight. Kenya’s leadership could provide a template for other African nations developing their own virtual asset frameworks.