In a significant shift in policy, Kenya’s Treasury Cabinet Secretary John Mbadi has announced plans for legislation aimed at legalizing cryptocurrencies in the country. This move marks a departure from the government’s historically cautious approach to the burgeoning digital asset industry, which has often been characterized by warnings and advisories against cryptocurrency use.
According to Mbadi, the rapid emergence and growth of Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs) present both innovative opportunities and unique challenges within both local and international financial systems. He articulated the necessity for a comprehensive regulatory framework designed to harness the potential benefits associated with cryptocurrencies while simultaneously addressing risks related to money laundering, terrorism financing, and fraudulent activities.
“The Government of Kenya is committed to creating the necessary legal and regulatory framework in order to leverage opportunities presented by VAs and VASPs while managing the reluctant risks,” Mbadi noted, emphasizing the government’s proactive approach towards fostering a viable cryptocurrency ecosystem.
This initiative is further underscored by the launch of a draft policy in December, which aims to create a “fair, competitive and stable market” for industry players, as well as to encourage innovation and enhance financial literacy among the populace.
Historically, Kenya has maintained a cautious stance regarding cryptocurrencies. In December 2015, the Central Bank of Kenya issued a public notice that explicitly warned against the use of virtual currencies, stating that these assets were not recognized as legal tender and that no licenses were granted for any entity to offer money remittance services using cryptocurrencies.
However, the landscape began to change in 2022, when lawmakers started deliberating on potential legislation aimed at taxing digital currencies, coinciding with a notable increase in cryptocurrency adoption within the country. A United Nations report from that period indicated that approximately 8.5% of Kenyans owned cryptocurrencies, highlighting the growing acceptance of digital assets among the Kenyan populace.
As discussions continue, the implications of this legislative shift will undoubtedly shape the future of Kenya’s financial landscape, fostering a regulated environment that could spur greater involvement in the cryptocurrency market.
CoinDesk has yet to receive a response from Kenya’s Treasury regarding this emerging legislative framework.
