Kenya Initiates Process to Regulate and Legalize Cryptocurrency Trading

The government of Kenya has initiated the formal process of integrating cryptocurrency trading, such as Bitcoin, into its legal and financial systems.

In a significant policy development, John Mbadi, the Treasury Cabinet Secretary, indicated the government’s intention to create legislative proposals concerning digital currencies and their service providers.

Delivering remarks on this transformative direction, Mbadi highlighted both the prospects and challenges of such assets. Kenya’s objective is to tap into the commercial promise that cryptocurrencies hold while simultaneously mitigating associated risks, including criminal activities like fraud and the financing of terrorism.

He declared, “The Kenyan administration is fully invested in establishing the requisite normative and supervisory environment for the fruitful integration of Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs), along with the diligent identification and management of emerging dangers.”

As part of this regulatory advancement, Kenya evaluated a preliminary version of its digital currency policy in December, which is currently being scrutinised. The prospective legislative proposal aims to engender an equitable, robust, and steady economic ecosystem for participants in the cryptocurrency market, signifying a notable pivot from Kenya’s previous regulatory position.

Previously in 2015, the nation’s Central Bank issued a directive dissuading the use of cryptocurrencies, deeming them invalid as an authorised means of exchange. Nonetheless, a report from the UN in 2022 unveiled that an approximate 10% of the Kenyan population owned cryptocurrencies, a revelation that has since driven legislators to reassess their regulatory stance.

If this goes forward as projected, Kenya could be looking to align itself with other African countries, such as South Africa and the Central African Republic, that have already sanctioned the use of cryptocurrency within their financial systems.