Kenya prepares to create a framework for regulating a fair crypto market

Kenya is taking decisive steps to regulate cryptocurrencies as the government shifts its stance from cautious warnings to a more structured approach. Treasury Cabinet Secretary John Mbadi has confirmed plans to introduce a legal and regulatory framework aimed at fostering a fair and stable crypto market. This move is outlined in the ‘National Policy on Virtual Assets and Virtual Asset Service Providers,’ a draft proposal open for public feedback until 24 January.

The policy proposes comprehensive regulations for virtual assets, addressing key concerns such as money laundering, terrorism financing, and consumer protection. It aims to establish clear standards and procedures to govern virtual asset service providers, setting Kenya on a path similar to other African nations like South Africa and Nigeria, which have embraced crypto regulation.

Kenya’s cautious journey with cryptocurrencies dates back to a 2015 warning by the Central Bank of Kenya (CBK), highlighting risks like fraud and lack of legal safeguards. However, a significant shift occurred in September 2023 when the country completed an assessment of money laundering risks tied to virtual assets. With stablecoins accounting for nearly half of the region’s transaction volume, Kenya’s proactive regulatory approach could solidify its role as a leader in sub-Saharan Africa’s crypto adoption landscape.