The Kenyan government has invited public comments on draft crypto policies. According to the country’s Ministry of National Treasury and Economic Planning, the draft regulations were developed through a multi-agency task force.
The Kenyan Ministry of National Treasury and Economic Planning published a request for public comments on two draft legislations related to crypto. The Ministry also rolled out the Virtual Assets Service Providers bill, which is set to be tabled before parliament.
Kenyan government invites the public to make comments on draft crypto regulations
The Ministry of National Treasury and Economic Planning set January 2025 as the deadline for public participation in the two legislations. The first legislation is the draft policy on virtual assets and virtual asset service providers, and the second is the Virtual Asset Service Providers Bill 2024.
According to the ministry, the two legislations were formulated by a multi-agency task force within the country. The ministry added that the bill and policy would be accessible to the public on its official website.
The government agency highlighted that public participation was in accordance with the Statutory Instruments Act 2013. The act provides that citizens should air their views on any intended laws and regulations within the country. The ministry added it would also conduct public participation forums nationwide and outlined the schedule in the announcement.
John Mbadi, Kenya’s cabinet secretary for the National Treasury and Economic Planning Ministry, appreciated the need for financial inclusion through technological advancements within the county. He also recognised the rise in virtual assets in the global space presented opportunities for innovation in the local financial system.
Mbadi also acknowledged the rise of virtual assets presented challenges such as terrorism financing, money laundering, fraud and cybercrime. The cabinet secretary noted that these challenges underscored the urgent need for a legal and regulatory framework to govern virtual assets.
He emphasized that the Kenyan government was committed to leveraging opportunities presented by Virtual assets and Virtual asset service providers. Mbadi added the policy was intended to create a fair market for virtual assets within the country.
In the policy, the cabinet secretary commented,
“The policy takes account of regulatory approaches from various jurisdictions and provides a
framework that is adaptive and flexible for domestic and international cooperation, compliance,
consumer protection, financial innovation and management of risks.”
The ministry outlined the intended act’s objectives as providing a legislative framework to regulate virtual asset service providers and address risks associated with misusing virtual asset products and service provider services.
The bill’s objectives also included establishing virtual asset service providers and issuers of initial virtual asset offerings in Kenya, licensing virtual asset service providers, and approving the issuance of initial virtual asset offerings.
The ministry also specified that the agencies that would enforce the act would include the Capital Markets Authority and the Central Bank of Kenya. It stated that agencies should ensure financial stability and market integrity within the country.
Kenyan government shifts position despite warnings from the Central Bank
In 2015, the Central Bank of Kenya issued a press statement cautioning the public on virtual currencies such as Bitcoin. The central bank raised concerns over the public’s trading of cryptocurrencies despite being unregulated under national laws.
The CBK informed the public that cryptocurrencies were not legal tender and that consumers would have no recourse if the virtual currencies failed. It raised some risks associated with cryptocurrencies, including the fact that the assets were untraceable and highly volatile.
Despite the global regulatory shifts, the Central Bank of Kenya has reportedly maintained its position on cryptocurrencies over the years. The capital markets authority warned the public against crypto-related transactions; however, the agency later softened its stance.
The International Monetary Fund (IMF) advised Kenya to implement a regulatory framework to help address the risks presented by virtual assets. In its report, the IMF stated that crypto exchanges could not obtain licenses within the country, exposing consumers to potential fraud and financial losses.
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