Kenya Advances Toward Crypto Regulation as MPs Support Joint Oversight of Digital Asset Sector
A parliamentary committee has endorsed a proposal to create a joint regulatory team to supervise the activities of digital asset service providers in Kenya, paving the way for enhanced oversight of the burgeoning cryptocurrency and digital asset market.
The Finance Committee of the National Assembly has suggested that five government agencies collaboratively oversee virtual asset service providers (VASPs), representing a significant progression towards the formal regulation of the sector.
The agencies proposed to form part of this multi-agency framework include the Central Bank of Kenya, the Capital Markets Authority, the Competition Authority of Kenya, the Communications Authority of Kenya, and the Office of the Data Protection Commissioner.
“The committee concurred with the stakeholder’s proposal (Credence Africa),” states the committee’s report, following public consultations on the Virtual Asset Service Providers Bill, 2025.
The team may also encompass any additional institution designated by the Cabinet Secretary through a gazette notice.
This collaborative unit is anticipated to monitor various aspects of the digital asset ecosystem, focusing on consumer protection, market practices, data security, and the digital infrastructure.
The model was introduced to the committee by Credence Africa, a social enterprise that took part in the public hearings regarding the proposed legislation.
Digital assets consist of valuable items that exist in electronic form, such as cryptocurrencies, tokens, and other digitally generated representations used for value exchange.
These digital assets are non-physical yet are increasingly being embraced as alternative financial instruments worldwide.
The committee has also accepted a recommendation from the Virtual Assets Chamber (VAC) to eliminate a clause from the Bill that would have empowered the regulatory authority to conduct off-site surveillance.
According to the VAC, this provision was ambiguous and lacked clear definitions, raising concerns about potential overreach.
The Virtual Asset Service Providers Bill was presented to Parliament on April 4, 2025, and has garnered strong support from stakeholders in the crypto industry.
For years, these companies have struggled with limited access to banking services due to an advisory from the Central Bank that warned financial institutions against engaging with crypto-related businesses.
Former Central Bank Governor Patrick Njoroge previously cautioned that digital currencies could pose risks to financial stability, while also recognizing their potential to enhance financial inclusion and lower transaction costs.
The proposed legislation will mandate all virtual asset service providers to establish and maintain a bank account within Kenya, which is anticipated to address concerns over transparency and accountability in the sector.
If enacted, Kenya will join Nigeria and South Africa as one of the few African nations with a legal framework for regulating cryptocurrencies and related digital assets.
A report by the United Nations in 2022 revealed that Kenya topped the continent in digital asset adoption, with around 8.5 percent of the population, equating to approximately 4.25 million individuals, owning cryptocurrencies.
The nation ranked ahead of numerous advanced economies, including the United States, where 8.3 percent of the population held digital currencies.
Source link
#Kenya #moves #closer #crypto #regulation #MPs #joint #oversight #digital #asset #sector
