- Kenya is preparing to legalize cryptocurrencies with plans for a new draft policy aimed at regulating virtual assets and service providers in 2025.
- Treasury Cabinet Secretary John Mbadi stated that the policy will address the opportunities and risks of cryptocurrencies, such as money laundering and fraud.
Kenya is preparing to introduce legislation aimed at legalizing cryptocurrencies, a significant shift in the country’s approach to virtual assets (VAs). In the announcement, Treasury Cabinet Secretary John Mbadi acknowledged the risks associated with cryptocurrencies, including money laundering and fraud, but emphasized the necessity of a regulatory framework to maximize the potential benefits of this emerging sector.
According to the local news outlet, The Standard, Mbadi described Kenya’s financial sector as “a beacon of innovation and growth in Africa.” He highlighted that the rise of virtual assets and virtual asset service providers (VASPs) has brought about both new opportunities and challenges, not just locally but internationally. The government’s primary goal is to create a balanced legal and regulatory framework that allows Kenya to harness the benefits of these technologies while managing the associated risks.
In December 2024, Kenya launched a draft policy on virtual assets and VASPs. The policy’s goals are to establish a legal framework that governs virtual assets, promote a fair and efficient market for these assets, and ensure sound risk management practices. This draft policy is an essential step toward implementing the regulatory structure required to foster a growing and secure crypto market in Kenya.
Kenya’s Shift in Stance Towards Cryptocurrencies
Despite the growing interest in cryptocurrencies, their volatility has led to cautious investor behavior. Historically, Kenya was skeptical about digital currencies, with the Central Bank of Kenya issuing a 2015 warning about their non-recognition as legal tender. A 2023 CBK policy document highlighted liquidity issues and poor governance as key risks for crypto firms. However, by 2022, 8.5% of Kenyans owned crypto, prompting lawmakers to reconsider their stance.
Currently, former skeptics are embracing cryptocurrencies as a safe haven amidst market volatility. For example, President-elect Donald Trump, once critical of digital assets, has become a crypto advocate. His shift was evident during a 2024 Bitcoin conference speech. Similarly, Russian President Vladimir Putin, who previously dismissed Bitcoin (BTC), recognized its unstoppable nature and signed laws that favor digital assets, including exempting crypto mining from VAT.
The International Monetary Fund (IMF) has recently provided guidance for Kenya’s crypto regulation. In a report published on January 8, 2024, the IMF urged the Kenyan authorities to establish a well-structured regulatory framework that aligns with international standards. This global endorsement further underscores the importance of creating a regulatory environment that balances innovation with the need for consumer protection and financial stability.
Kenya’s pro-cryptocurrency stance is seen as a strategic move to stay competitive within Africa. It aims to enhance financial inclusion and reduce transaction costs, joining other African nations like Nigeria, South Africa, and Egypt, which are leading in cryptocurrency adoption. Globally, countries like Ohio, Brazil, Texas, and Pennsylvania are adopting Bitcoin as an alternative to traditional reserve assets, signaling a growing international trend in the use of digital currencies.
