Kenya is poised to make a groundbreaking move by entrusting industry representatives with the development of a regulatory framework for cryptocurrency. The Blockchain Association of Kenya (BAK) has been directed by the National Assembly’s Departmental Committee on Finance and National Planning to craft the initial draft of what could potentially become a “virtual asset service provider’s bill.”
On October 31, the Committee on Finance and National Planning invited BAK representatives to engage in discussions regarding the regulation of digital assets. Allan Kakai, BAK’s legal and policy director, shed light on the meeting’s purpose in a statement to the local media:
“In essence, we are conveying to the parliament: ‘Kenya has consistently positioned itself as the Silicon Savannah; we rank among the top three for digital asset volume in Africa. If we do not establish a clear licensing and regulatory framework, Nigeria, South Africa, Botswana, Namibia, Mauritius, and others will seize the lead, diverting the capital inflow that could have otherwise come to Kenya.'”
In response to this call, the Committee has given BAK a two-month window to draft the cryptocurrency bill. The Committee’s official statement on its former Twitter account simply mentioned that it “encouraged the Association to conduct comprehensive public education on cryptocurrency trading to demystify the concept.”
In September 2023, Kenya introduced the Financial Act of 2023, which included a provision requiring cryptocurrency exchanges to withhold 3% of the transfer or exchange value of digital assets. BAK, whose members were unable to dissuade lawmakers from passing this cryptocurrency tax during a meeting in May, filed a complaint against it with the High Court of Kenya.
Kenyan authorities have also taken a stringent stance against the contentious digital ID crypto project Worldcoin, co-founded by Sam Altman, the CEO of OpenAI. A parliamentary committee within the Kenyan government recommended that regulators shut down the project’s operations in the country, citing concerns related to personal data harvesting.