Kenya to Regulate the Crypto Market

Kenya is taking steps towards regulating cryptocurrencies, as reported by NTV Kenya. The government is assembling a multi-agency team, which includes the central bank, to establish rules and oversight for cryptocurrencies and the companies involved in trading them, known as Virtual Asset Service Providers.

On the other hand, the Nigerian government’s stance on cryptocurrency has been somewhat contentious, with the Central Bank issuing directives that restricted banks and financial institutions from facilitating cryptocurrency transactions in February 2021. This move created uncertainty and led to criticism from various quarters, including cryptocurrency enthusiasts and industry stakeholders.

Kenya has been proactive in taking steps towards cryptocurrency regulation, as seen in the formation of a multi-agency team to develop rules and oversight for cryptocurrencies and related service providers. This initiative was revealed by Kenyan National Treasury Cabinet Secretary Prof. Njuguna Ndung’u during a session with the National Assembly. The move comes in response to warnings from regulators regarding unlicensed virtual asset products and concerns raised by the Central Bank about potential money laundering and terrorist financing risks associated with cryptocurrencies.

In its 2022 anti-money laundering report, Kenya identified virtual assets and service providers as areas requiring attention. Moreover, Kenyan authorities uncovered suspicious M-Pesa withdrawals totaling at least $20 million in 2023, linked to the now-suspended iris-scanning project Worldcoin. Despite being a leading hub for cryptocurrency activity in East Africa and ranking among the top five markets on the continent, Kenya lags behind Nigeria in total cryptocurrency ownership, with approximately 4.4 million holders.

Kenya’s stance on cryptocurrency regulation appears to be evolving. In 2023, the country’s parliament actively engaged in discussions and initiatives related to crypto. This progress culminated in the National Assembly’s committee approving the Capital Markets (Amendment) Bill, 2023 in December. If passed, this bill would introduce taxation on crypto exchanges and wallets, aligning them with traditional bank transactions and marking a significant shift in Kenya’s approach to crypto regulation.

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