The news:
- Blockchain Association of Kenya (BAK), a digital asset policy advocate, has drafted the country’s first-ever Virtual Assets Service Provider (VASP) bill to regulate the digital asset market in Kenya.
- The VASP bill, first published on January 22, 2024, has been released for public review and has received responses ranging from positive to negative from Kenya's digital asset community.
- The bill comes only three months after Kenya's parliament requested that a community-based NGO develop a first draft of the crypto bill during their first meeting on October 31, 2023, expected to be submitted by February 14.
The lobby group first contacted Kenya's National Assembly Committee on Finance and National Planning in August 2023, protesting the Digital Asset Tax (DAT) provision in the country's Finance Act, 2023.
According to Chainalysis's cryptocurrency transaction data from July 2022 to June 2023, Kenya has a large crypto economy, ranking third behind Nigeria and South Africa. The country also came in 21st in global crypto adoption.
However, fraud, high entry barriers for cryptocurrency startups, and restrictive tax policies are just a few of the consumer protection issues plaguing Kenya's crypto market.
Nonetheless, the proposed cryptocurrency bill aims to protect consumers by establishing a consumer protection framework.
In addition, it proposed operator licencing requirements under a regulatory sandbox along with anti-money laundering and counter-terrorism financing (AML/CTF) provisions to address industry and regulator concerns.
BAK invited all relevant stakeholders in Kenya, Africa, and the world to review and critique the cryptocurrency bill by today, Wednesday, February 7, 2024.
After this, the lobby group will revise the first draft, incorporating the relevant feedback to arrive at the second draft of the bill, which they will then submit to the National Assembly’s Departmental Committee on Finance and National Planning in Kenya on February 14, 2023.
Commenting on the bill, Founder and Chairman of BAK, Michael Kimani, explained how the drafted bill would help realise the group's vision of becoming a global digital asset hub in the league of places like Singapore and Dubai.
Digital asset regulation has been a controversial topic in Africa for some time now. Countries like Nigeria and South Africa have taken measures to set in motion legislation to regulate their market, setting the tone for other African nations.
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BAK's proposed bill, if passed, is expected to position Kenya to maximise the market's tax revenue potential.
BAK co-founder and CEO Paul Gachora emphasised the enormous economic opportunity digital assets and blockchain provide to the Kenyan government to support its economic recovery goals.
“Our goal is to help Kenya raise $1 billion in foreign direct investments to various sectors as outlined in Kenya's medium-term economic plan by 2027,” Gachora stated.
