Kenya is planning to introduce regulations for cryptocurrencies, a departure from its previous cautious stance.
The government aims to establish a legal framework for virtual assets and virtual asset service providers (VASPs) to create a fair and stable market while addressing risks such as money laundering and terrorism financing.
The draft proposal is open for public feedback until January 24. If approved, Kenya would join other African countries like South Africa and Nigeria in implementing regulatory measures for cryptocurrencies.
In the past, the Central Bank of Kenya warned against the use of cryptocurrencies due to concerns about fraud and illicit activities. However, a comprehensive assessment in September 2023 recommended the regulation of virtual asset activities to mitigate risks and enhance the country's anti-money laundering framework.
Kenya ranks 21st globally on the Crypto Adoption Index, with stablecoin transactions accounting for a significant portion of the total transaction volume. The proposed regulatory framework is expected to have implications for the Kenyan economy and financial sector, fostering innovation, attracting investment, and enhancing consumer protection.
The outcome of Kenya's regulatory journey will be closely watched by other countries in the region and beyond, potentially serving as a model for digital asset regulation.