Kenya's Crypto Ecosystem Shifts Towards Regulatory Certainty

Kenya’s Crypto Ecosystem Shifts Towards Regulatory Certainty

Time Stamp: November 10, 2023 12:51 AM
  • BAK received a two-month timeframe to draft a robust and standard crypto bill.
  • The crypto bill will become the Virtual Asset Service Provider’s Bill to generate a regulatory framework around Kenya’s crypto ecosystems. 
  • Kenya holds over $1.5 billion worth of Bitcoin, indicating an increased acceptance rate.

Amid Africa’s crypto industry, four prominent names have led the industry to its current state of glory and fame. South Africa, Nigeria, Egypt, and Kenya have dominated the crypto space for some time. The high trading volume of these regions has inspired their government to take active steps to embrace web3 applications. For instance, Nigeria, the first African country to launch a CBDC, has made significant efforts to grow its blockchain ecosystem.

 As a result, Nigeria currently leads the continent’s trading volume and fintech industry. It houses the continent’s largest crypto-startup, Flutterwave, and is a haven for fintech-based organizations. South Africa’s crypto ecosystem has thrived due to its government’s positive take on cryptocurrency. 

The nation has the most crypto infrastructure in Africa and was the first country to view digital asses as financial products legally. The positive interventions of these two regions have inspired many other African governments to give cryptocurrency and blockchain a chance. 

In recent news, Kenya’s crypto ecosystem has taken a step further as the Blockchain Association of Kenya takes active steps to draft a crypto bill. This will eventually result in a regulatory framework for the nation.

BAK embarks on drafting a crypto bill for Kenya’s crypto ecosystem

Kenya’s crypto ecosystem is among the top of Africa’s crypto industry, rivaling the likes of Nigeria and South Africa. Its government has recently undertaken an initiative to overhaul its digital economy. Kenya has undertaken several projects throughout the year to drive its youth to a more digital incentive economy. Among this trend is the Digitalent program, which allocates graduates to ICT centers. Its drive for excellence Enya has turned its attention towards blockchain to increase its web3 presence in Africa.

Also, Read Kenya: A huge cryptocurrency marketplace chained by its regulations.

In recent news, Kenya’s parliament has tasked the Blockchain Association of Kenya to prepare the country’s first crypto bill. According to the announcement, the crypto bill will become the Virtual Asset Service Provider’s Bill to generate a regulatory framework around Kenya’s crypto ecosystems. 

The Blockchain Association of Kenya has advocated for a regulatory framework for some time. In 2022, Kenya’s crypto ecosystem received a rude awakening. The governor of CBK made it clear that introducing digital assets into the country would be economic suicide. Fortunately, after a series of deliberation and discussions, the Kenyan government finally decided to take the initiative and embrace blockchain technology.

Advocating for Change

Blockchain Association of Kenya first engaged with the government after opposing the Digital Asset Tax.

BAK met with the National Assembly Committee to shape Kenya’s crypto ecosystems through a regulatory framework. The government will enquire with the aid of Binance, Yellow Card, Kotani Pay, and the Law Society of Kenya to construct a robust crypto Bill encompassing the entire web3 industry.

Kenya's-crypto-ecosystem-BAK

Blockchain Association of Kenya gets the green light to create a crypto bill for Kenya’s crypto ecosystem.[Photo/Medium]

On 31st October, Blockchain Association of Kenya representatives met with the Department, Committee of Finance, and National Panning. Allan Kakai, BAK’s legal policy director, said, “We are telling [the] parliament: ‘Look, Kenya has always branded itself as the Silicon Savannah; we are top three for digital assets [volume in Africa], and if we do not develop a clear licensing and regulatory framework, Nigeria, South Africa, Botswana, Namibia, Mauritius would take the lead, and the capital flow that would have come to Kenya would have flocked elsewhere.”

As a result, BAK received a two-month timeframe to draft a robust and standard crypto bill. This will encompass the general issues of Africa’s crypto industry. In addition, the committee publicly urged the BAK to conduct a series of educational initiatives to demystify cryptocurrency in the entire region.

The Road to Success

Kenya’s crypto ecosystem has had a rocky journey to establishing a regulatory framework. Despite this, the adoption rate of web3 has significantly increased. Currently, the CBK has publicly opposed cryptocurrency, warning its citizens to be weary of its potential dangers. For instance, the CBK shunned the efforts of WrorldCoin, stating its method of attaining users infringes on the nation’s security. 

Fortunately, the CBK has warmed up to the notion of blockchain technology. The rapid diversification of Africa’s crypto industry into fintech and decentralized applications has opened numerous opportunities for peer nations. CBK has launched active research on CBDCs in hopes of launching the nation’s first digital currency.

Also, Read Kenya’s digital economy is affected as fiat currency performs poorly.

To establish proper regulatory frameworks for Kenya’s crypto ecosystems, the government is moving into a strict ecosystem to compact tax evasion and corruption. Unfortunately, this led to establishing a tax Bil on digital assets, which received quite the opposition. Kenya holds over $1.5 billion worth of Bitcoin, indicating an increased acceptance rate.

BAK collaborating with the National Assembly will effectively shape the industry’s future. Kakai added, “The discussion agenda was to develop a collaborative approach on how Blockchain Association of Kenya can work with the national government in developing favorable policies around digital assets. For the first time, a parliamentary committee has directed an association or a stakeholder group to draft a parliamentary bill and bring it to parliament for adoption. This is very interesting because this has never happened with the Bank Association, this has never happened with the Fintech Association, this has never happened with the Digital Lenders Association, this has never happened with any association at all.”

If properly executed, the crypto bill will overhaul the trajectory of Kenya’s crypto ecosystem.

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