Kenya Expands Tax Oversight of Cryptocurrency Transactions

Kenya is preparing to tighten oversight of cryptocurrency trading through new tax reporting rules that would require exchanges and digital asset platforms to hand over customer transaction records to the Kenya Revenue Authority (KRA).

Proposals contained in the Finance Bill 2026 would compel virtual asset service providers to submit annual filings detailing customer activity, including purchase prices, sale values, profits and payments made using cryptocurrencies. The measures would also allow the KRA to exchange crypto-related tax information with foreign governments under international reporting agreements.

The changes place cryptocurrency trading under a level of scrutiny already common in the banking sector, where tax authorities routinely exchange financial account information across borders.

“Each virtual asset service provider shall file an information return with the Commissioner,” the proposed amendment states, referring to users identified as reportable persons or linked to reportable controlling entities.

The Treasury’s approach reflects the growing scale of digital asset use in Kenya’s economy. Crypto transactions in the country reached an estimated Sh2.4 trillion between 2021 and 2022, according to KRA estimates, equivalent to nearly 20 percent of GDP during that period.

Stablecoins have become particularly important in cross-border commerce. Data from blockchain analytics firm Chainalysis showed Kenyans transacted about Sh426.4 billion worth of stablecoins in the year ending June 2024. Businesses increasingly use the assets to settle import payments, while some multinational firms rely on them to move funds across markets outside traditional banking channels.

Under the proposed law, exchanges operating in Kenya would be expected to identify customers, determine beneficial ownership and maintain detailed records of transactions. That marks a significant departure from the relative anonymity that has defined much of the crypto market.

The Bill introduces penalties for inaccurate disclosures. False entries could attract fines of Sh100,000 per violation, a prison term of up to 3 years, or both. Omitting required information would carry the same financial penalty for each undisclosed item.

Kenya’s proposals mirror broader international efforts to bring cryptocurrency trading into formal tax systems. More than 75 countries have committed to adopting the Organisation for Economic Co-operation and Development’s Cryptoasset Reporting Framework (Carf), which standardises how tax agencies collect and exchange crypto transaction data.

The framework took effect globally on January 1, 2026. From 2027, participating jurisdictions are expected to begin automatically sharing information obtained from exchanges and digital asset providers. Countries implementing the rules include members of the European Union, Brazil, South Africa, Singapore, Switzerland and the Cayman Islands.

The United States is expected to begin implementation in 2028.

Kenya’s alignment with those standards could make compliance easier for global exchanges operating across multiple jurisdictions, including platforms such as Binance and Coinbase. It also signals that local regulators are moving beyond taxation alone toward broader financial surveillance and anti-money laundering enforcement.

For years, the Central Bank of Kenya maintained a cautious position on digital assets, warning that cryptocurrencies could expose the financial system to fraud, money laundering and illicit financing. But rapid adoption among consumers and businesses has forced regulators to adapt faster than the legal framework itself.

Kenya already imposes a 3 percent digital asset tax collected by exchanges on certain transactions. The new reporting requirements would give authorities direct visibility into who is trading, how much they are earning and where funds are moving.

The proposed law is expected to face public participation before debate in Parliament. If approved, it would place Kenya among the African countries with the most detailed crypto tax reporting obligations, alongside South Africa and Mauritius, which have already expanded compliance rules for digital asset transfers and customer disclosure.

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