Kenya’s Shift Towards Cryptocurrency
In a groundbreaking shift in policy, Kenya is preparing to embrace the world of cryptocurrencies, as revealed by Treasury Cabinet Secretary John Mbadi.
The government’s upcoming legal framework aims to establish a well-regulated environment for cryptocurrencies and Virtual Asset Service Providers (VASPs), addressing critical issues like money laundering and fraud prevention.
Regulatory Framework and Financial Inclusion
Mbadi stated that the Kenyan administration recognizes the surging popularity and potential benefits of cryptocurrency.
This marks a significant change from former restrictions.
He highlighted that the financial sector in Kenya serves as a beacon of innovation and growth within the African continent, while also acknowledging the unique challenges and opportunities presented by Virtual Assets (VAs) and VASPs.
The draft policy being proposed is designed to ensure a “fair, competitive, and stable market” for VAs and VASPs.
The focus will be on implementing regulations that effectively reduce risks tied to terrorism financing.
By doing so, the government aims to harness the advantages of digital finance, enhance financial inclusion, and stimulate a competitive environment for cryptocurrency.
Current State and International Alignment
Mbadi also pointed out Kenya’s ongoing commitment to improving access to financial services, reminiscing about the launch of Safaricom’s M-Pesa mobile money platform in 2007.
This service was a turning point in the quest for financial accessibility.
Now, the government plans to build a robust legal framework that will support further growth in the cryptocurrency sector, positioning Kenya as a pivotal player in the global digital finance space.
Presently, the rules governing cryptocurrency trading and usage in Kenya are somewhat ambiguous.
Despite being ranked third in Sub-Saharan Africa and 28th worldwide for cryptocurrency adoption, according to the 2024 Chainalysis report, the Central Bank of Kenya has previously warned of the risks that come with cryptocurrencies, particularly their volatility and lack of transparency.
This recent development aligns with a report from the International Monetary Fund (IMF), which called for tighter regulations surrounding cryptocurrencies in Kenya.
The report stresses the urgency of aligning with international standards while addressing vital issues such as consumer protection and anti-money laundering measures, showcasing the need for a comprehensive approach to digital financial oversight.
Source: Cryptobriefing
