By Isaac Ouma
Published on: January 21, 2025 | 01:00 (EAT)
Kenya has unveiled plans to regulate the cryptocurrency sector with a new bill mandating that crypto firms establish local offices and appoint CEOs and directors approved by the government. The proposed Virtual Asset Service Providers Bill, 2025, published by the National Treasury, outlines comprehensive measures aimed at fostering accountability and oversight in the rapidly growing industry.
The bill states: “A virtual asset service provider shall maintain a registered office in Kenya.” This requirement would apply to global crypto giants like Binance and Coinbase, which are known for operating without centralized headquarters or physical offices.
New Standards for Governance
The bill requires crypto firms to appoint CEOs and directors who meet stringent qualifications vetted by regulatory bodies such as the Capital Markets Authority (CMA). These individuals must have a clean record, with no history of fraud or violations related to virtual assets.
Additionally, the legislation stipulates that a firm’s board of directors must consist of at least two natural persons, and directors are prohibited from serving on multiple boards simultaneously.
Tackling Crypto Challenges
The proposed regulations come as Kenya grapples with challenges in the decentralized crypto space, including fraud, money laundering, and tax evasion. By introducing licensing requirements and governance structures, the government aims to create a more transparent and regulated environment.
Rising Tax Focus
Kenya’s crypto market, estimated to have transacted Ksh. 2.4 trillion between 2021 and 2022 (close to 20% of the country’s GDP), has drawn the attention of tax authorities. The Kenya Revenue Authority (KRA) has announced plans to monitor real-time crypto transactions and impose taxes on digital assets.
Parliament is also considering amendments to the Capital Markets Act to define cryptocurrencies as securities, paving the way for the introduction of capital gains tax on crypto exchanges and excise duty on transactions.
Kenya’s Growing Role in Crypto Regulation
With an estimated 4 million crypto users, Kenya is positioning itself as a leader in African cryptocurrency regulation. While other African nations like South Africa and Rwanda are also introducing regulatory measures, Kenya’s proposals go further by requiring a local presence and strict governance standards.
These regulations, if enacted, could enhance investor confidence while potentially deterring crypto firms that are unprepared to meet the stricter requirements.
($1 = Ksh.129.56)