Kenya has approved a bill to regulate digital assets in the country

A senior parliamentarian revealed on Monday that Kenya has approved a bill to regulate digital assets, including cryptocurrencies. The initiative comes as the country seeks to boost investments in the digital asset sector by establishing clear rules for the industry.

Member of Parliament Kuria Kimani stated that Kenyan legislators passed the Virtual Asset Service Provider Bill last Thursday. The chairman of the finance committee in the National Assembly acknowledged that the legislation seeks to address concerns over the lack of clear regulations governing the crypto sector in Kenya.

Kenya addresses concerns over the lack of clear local crypto regulations

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Kimani argued that the initiative positions Kenya one step closer to joining others, such as South Africa, as the only African country with laws governing the digital asset industry. He also argued that President William Ruto needs to sign the legislation into law. 

The bill reveals that the central bank will be the licensing authority for the issuance of stablecoins and other virtual currencies. The Treasury will still hold the power to re-establish the authority if the need arises. The capital markets regulator will be responsible for licensing firms that wish to operate crypto exchanges and other trading platforms. The structure mirrors the concerns raised by the Financial Sector Regulators Forum, which warned that matched authorization would lead to legal ambiguity and hinder enforcement.

The Kenyan MP added that the legislation provides legal clarity around crypto in the country. He also believes that the bill will likely attract increased investments into the financial technology sector, including from crypto exchanges like Binance and Coinbase, citing past talks between the two platforms and the Kenyan government.

“We are hoping that Kenya can now be the gateway into Africa. Most of the young people between 18 and 35 years of age are now using virtual assets for trading, settling payments, and as a way of investment or doing business.”

-Kimani Kuria, Member of Parliament for Molo Constituency, Kenya.

Kenya’s move to introduce laws on crypto comes as countries now brace for a boom in U.S. dollar-backed stablecoins, which the Financial Stability Board has warned could undermine the currencies of less developed economies. As the digital asset space has grown over the years, regulation has been a concern for governments, which seek ways to prevent criminals from exploiting the anonymity of these systems.

Kimani revealed that the new legislation has borrowed from established practices in other countries, such as the U.S. and the UK. Kenya is known for pioneering mobile-phone-based financial services, with its M-Pesa technology operated by Safaricom. Financial technology provides services such as money transfer, savings, and investments to millions of people.

Legislation comes with provisions for digital asset providers 

The crypto legislation has also maintained the provision requiring all licensed virtual-asset providers to keep a physical office in Kenya and appoint a board of at least three natural-person directors. Kenyan lawmakers acknowledged that the initiative aims to curb shell operations and boost accountability in a sector long dominated by offshore entities with little local presence. 

Lawmakers believe the provision would give local authorities clearer oversight and ensure decision-makers can be held accountable legally in Kenya. The move was met with opposition from some crypto stakeholders, who argued that physical offices are not essential to their operations.

The new bill also aligns Kenya with global AML/CFT standards while avoiding bureaucratic expansion. The legislation requires all crypto firms to obtain licenses from the relevant regulator, segregate customer assets, and hold accounts in Kenyan banks. The bill also requires crypto companies to appoint compliance officers and undergo independent IT audits. Those companies will also need to implement detailed anti-money-laundering and data protection frameworks.

As the bill was being submitted, stakeholders proposed to introduce a recognition framework for foreign-licensed stablecoins. The initiative would allow entry only from vetted jurisdictions and be subject to strict reserve, audit, and custody rules. These rules require issuers to maintain 100% collateral, use licensed Kenyan custodians, and ensure full liquidity for redemptions.

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