In Kenya, the National Treasury has initiated a public consultation on a new bill and policy designed to regulate cryptocurrencies and virtual asset companies, such as crypto exchanges. This move follows a warning from the International Monetary Fund (IMF) about Kenya’s lagging regulatory efforts in this industry.
The proposed bill aims to address the legal uncertainties that have hindered banks from dealing with cryptocurrencies in the country. It also presents an opportunity for crypto exchanges like Binance, which currently operate without formal regulatory approval.
The National Treasury stated that the policy and bill establish a framework for overseeing and developing the virtual assets ecosystem. The Treasury is now seeking public input on these proposals.
The financial sector in Kenya is overseen by the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA). While the CMA has shown some flexibility towards virtual assets, the CBK has maintained a strict stance, cautioning banks against involvement with virtual currencies.
The IMF has urged Kenya to implement a clear regulatory framework for virtual assets due to concerns about money laundering and terrorism financing risks. The absence of specific laws governing cryptocurrencies and the lack of formal regulatory policies have been highlighted as areas of concern by the IMF.
Without proper regulation, crypto exchanges have struggled to obtain operating licenses, leaving users vulnerable to fraud and financial risks. This lack of oversight has also made it easier for malicious actors to take advantage of the unregulated digital assets market.
An estimated 4 million Kenyans hold crypto assets, but without regulation, determining the true value of these assets, which could amount to millions of dollars, remains challenging.
The IMF has noted a significant level of uncertainty and lack of consensus among authorities regarding the size, structure, and risks of the Kenyan crypto assets market.
With the public consultation process underway, attention is focused on how the government will navigate the digital assets market moving forward.