Kenya is contemplating a new policy that would require cryptocurrency businesses to establish local offices, aiming to enhance regulatory oversight of the country’s rapidly expanding virtual asset sector. According to a draft law recently published on the National Treasury’s website, the proposed regulation seeks to address gaps in the current legal and regulatory framework surrounding virtual assets and virtual asset service providers.
The law would exempt businesses dealing with assets that are unable to be traded, transferred, or used for payments outside a closed system. The policy’s primary objectives include improving consumer protection, ensuring data privacy, and enhancing cybersecurity measures within the crypto sector.
Rising Crypto Adoption in Kenya
The move comes as crypto adoption in Kenya continues to rise. According to Chainalysis, a blockchain analytics firm based in New York, Kenya ranks 28th out of 155 countries in its Global Cryptocurrency Adoption Index. The report highlights how cryptocurrencies are rapidly reshaping the financial landscape in Kenya, with the region becoming a growing hub for digital assets.
Despite the surge in crypto use, Kenya still lacks clear regulatory guidelines for the sector. In 2023, the country implemented a 3% tax on cryptocurrency transactions, but comprehensive rules governing the industry remain absent. The proposed law, if enacted, would require crypto businesses operating in Kenya to establish a local presence, allowing the government to more effectively monitor and regulate their activities.
Public Input and Uncertainty on Implementation
The draft law is currently open for public consultation, though the timeline for its implementation remains unclear. If passed, the regulation would mark a significant step toward formalizing the crypto industry in Kenya and providing more robust oversight.
Global Calls for Increased Crypto Oversight
This potential regulatory shift follows recommendations from international bodies like the Financial Action Task Force (FATF), which has urged Kenya to enhance its crypto oversight and tighten anti-money laundering (AML) policies. The country’s efforts to regulate cryptocurrency businesses are being closely watched, especially as the sector continues to gain momentum and attract more users.
