Kenya's Parliament Engages Blockchain Association for Crypto Bill Draft

In a significant move to regulate the burgeoning cryptocurrency market in Kenya, the country’s parliament has reached out to the Blockchain Association of Kenya (BAK) for expertise in drafting a potential Virtual Asset Service Provider’s Bill, also known as the Crypto Bill. The request came after BAK’s second meeting with the National Assembly Committee on Finance and National Planning on October 31, demonstrating a collaborative effort to shape the future of digital currency regulation in Kenya.

Soaring Crypto Activity in Kenya

Kenya’s cryptocurrency transactions have been soaring, with nearly $20 billion worth of activity recorded between July 2021 and June 2022. This surge places Kenya third in Africa for cryptocurrency site traffic and 21st globally in adoption rates. The country has already started to tax crypto assets under the Finance Act, 2023, indicating recognition of the sector’s economic significance.

BAK’s Role in Regulatory Framework Development

During the discussions with the parliamentary committee, BAK, supported by industry players such as Binance, Yellow Card, Kotani Pay, and the Law Society of Kenya (LSK), emphasized the importance of a comprehensive regulatory framework. They highlighted the need for clear licensing, a well-defined tax structure, consumer protections, anti-money laundering, and counter-terrorism financing measures, as well as a regulatory sandbox for innovation.

An Unprecedented Legislative Approach

The parliamentary committee’s directive for BAK to submit a bill within two months underscores a progressive approach to digital asset regulation. This initiative aims to close the knowledge gap that has previously limited the government’s engagement with cryptocurrencies. It also serves as a rare example of a legislative body asking a non-governmental organization to draft a piece of legislation.

Kenya Following African Leaders in Crypto Regulation

Kenya’s steps toward a digital asset regulatory framework align with similar efforts across Africa. South Africa, Nigeria, and Mauritius are leading the continent in crypto market values and have made significant strides in integrating regulations for digital assets. These countries serve as benchmarks for Kenya’s legislative journey in the crypto space.

The collaboration between Kenya’s lawmakers and the Blockchain Association of Kenya marks a pivotal moment in the country’s financial technology landscape. It demonstrates a growing acknowledgment of the importance of cryptocurrencies and the need for an effective regulatory environment to ensure their safe and beneficial integration into the economy.