Kenyan parliament has directed the Blockchain Association of Kenya (BAK) to prepare the first draft of the Crypto Bill, also known as the Virtual Asset Service Provider’s Bill.
The proposal came after BAK appeared before the country’s National Assembly Committee on Finance and National Planning in October 2023. BAK appeared before the committee to discuss digital asset regulation and how it can work with the government to develop favourable policies for digital assets.
Also present during the discussion were representatives from Binance, Yellow Card, Kotani Pay, and The Law Society of Kenya.
They both delivered a comprehensive presentation to the committee with key elements for rolling out a robust crypto regulatory framework. This included a clear licensing framework, tax framework, consumer protection framework, anti-money laundering and counter-terrorism financing (AML/CTF) measures and regulatory sandbox.
This is not the first time discussions around crypto regulations have come up in Kenya. In February this year, the Kenyan Senate took a proactive step to engage the Central Bank of Kenya (CBK) in discussions that could see the country legalize the use of crypto as a legal tender. The discussions were spearheaded by the Senate’s Standing Committee on Information, Communication, and Technology led by Trans Nzoia Senator Allan Chesang.
CBK published a Discussion Paper on Central Bank Digital Currency in February last year. In the Paper, the CBK highlighted the need, opportunities, and risks presented by digital currencies in Kenya.
The regulatory framework is expected to explore a large pool of digital payments such as electronic money (e-money), cryptocurrency, stablecoin, and Central Bank Digital Currency (CBDC). CBK defines CBDC) as a digital currency issued by the central bank and intended to serve as legal tender. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency, only that it is in electronic form.
Through the Discussion Paper, the CBK further invited members of the public, industry and stakeholders to review the various observations therein and give appropriate feedback.
Kenya is the 3rd most active country on cryptocurrency asset trade in Africa and has remained the highest web traffic to crypto sites in Africa. The bill if drafted will represent a significant step towards the realization of a comprehensive regulatory framework for the digital asset industry in Kenya.