IMF Suggests Kenya Update Cryptocurrency Regulations to Align with International Norms
The International Monetary Fund (IMF) is encouraging Kenya to align its cryptocurrency policies with global standards.
The IMF has advised Kenya to reform its old regulatory system, curb scams, and adopt a globally standardized crypto framework.
The IMF suggested that Kenya develop a straightforward and reliable regulatory system for its cryptocurrency market to shield consumers and address Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) concerns.
In response to a request from Kenya’s Capital Markets Authority (CMA), the IMF unveiled a technical assistance report on crypto regulations on January 8.
The IMF noted Kenya’s reliance on outdated traditional market regulations, which provide “limited and no legally binding” oversight of crypto markets.
The outdated regulations have led to a surge in cryptocurrency scams and various criminal acts within the East African nation.
IMF representatives found a “significant degree of uncertainty and lack of consensus” among Kenyan legislators on crypto regulation during their consultations in Nairobi.
As a result, the IMF suggested that Kenya develop cryptocurrency regulations in alignment with international frameworks and standards.
The IMF stated:
“The development of this framework should consider the unique challenges and opportunities within Kenya’s crypto market, ensuring it is robust, transparent, and capable of fostering innovation while protecting consumers and maintaining financial stability.”
The IMF recommended that Kenya comply with the Bali Fintech Agenda (IMF/World Bank), FATF guidelines for AML and CFT, and the FSB’s global regulatory standards for crypto-asset activities.
The IMF issued recommendations to address the challenges and shortcomings in Kenya’s existing regulatory approach to crypto assets.
Read also: Kenya’s fire brigade association becomes first labour union to embrace bitcoin
The IMF recommended short-term actions for the next six to twelve months, including conducting empirical research, encouraging collaboration and training among regulatory authorities, and clarifying the regulatory scope.
Additionally, the IMF also recommended long-term actions (12–24+ months), such as implementing a licensing and legal framework, reinforcing supervisory resources, and aligning Kenya’s regulations with global standards, among other initiatives.
The IMF urged Kenyan authorities to adopt more advanced methods for analyzing the crypto market, moving beyond surveys and questionnaires.
Kenya needs to specify crypto assets in financial laws to ensure legal consistency and avoid conflicting terms (such as digital currency and virtual assets).
The IMF urged Kenya to collaborate with foreign regulators to manage the risks linked to international exchanges operating in the country and to strengthen cross-border enforcement through cooperation.
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