Kenya’s National Treasury has started moving in the right direction in the regulation of the cryptocurrency sector by engaging the public in the formulation of legislation and a policy framework.
This is in response to increasing criticism by the International Monetary Fund (IMF) that the country is falling behind in the adoption and creation of crypto laws.
The proposed bill may be a solution to the long-standing problem that has locked Kenyan banks out in compliance with regulatory frameworks on cryptocurrencies.
For exchanges like Binance, which previously existed in a legal grey area without official permission, the new direction presents the way to legal recognition, which comes with clear normative prescriptions for business activities and the obligations of participants in the market.
The proposals presented in a comprehensive bill and the supporting policy were introduced by the National Treasury with the purpose of triggering sustainable growth in the sphere of virtual assets while strengthening the necessary level of regulation.
The fact that the government is seeking public views shows that progressive policies that affect stakeholder participation in defining the future of digital assets in Kenya are still welcome by the government.
The current regulatory landscape in Kenya’s financial sector is overseen by two main bodies: the Central Bank of Kenya CBK, the Capital Markets Authority CMA and others.
These institutions have especially different attitudes towards cryptocurrency regulation.
While the CMA has recently embraced the need to accept and adopt virtual assets, the CBK on the other hand has retained a negative stand and has been more vocal in delivering protective warnings to institutions in the country against incorporating cryptocurrencies.
Critical for the IMF is for Kenya to establish elaborated regulatory procedures that cover such essential aspects as threats arising from money laundering and terrorism financing.
The lack of a concrete cryptocurrency law and policies has also led to major risks in the market being exposed.
The lack of regulation has had several outcomes that cover a variety of areas of concern. Crypto exchanges are struggling with losing licenses, becoming an open door for consumers to lose their money to scamming websites.
Also, intensive investment in cryptocurrencies led to reckless operators due to inadequate supervision, thereby making it challenging to evaluate and address the growing cryptocurrency market systematically.
The consultation phase is an important process in the Kenya mats toward regulation of cryptocurrencies. Members of the industry, financial institutions, the public will play a role in deciding what form and type of laws will be used to regulate digital assets in the country.
The result of this consultation process and the adoption of regulations will serve as yardsticks for governing cryptocurrency in East Africa and more in general in other parts of the world.
