Kenya: BAK suggests new regulations for crypto firms

Stakeholders in the digital assets and cryptocurrency sector are advocating for new regulations to govern market entry for newcomers in Kenya.

The Blockchain Association of Kenya (BAK), along with other stakeholders, is suggesting the establishment of a regulatory sandbox to assess and regulate industry players before granting licenses.

In the proposed Virtual Asset Service Provider (VASP) bill submitted to the National Assembly, the Blockchain Association of Kenya (BAK) recommends that businesses involved in digital assets in the country be permitted to function as commercial entities.

Chair of the Blockchain Association of Kenya, Michael Kimani says that the bill contains a licensing framework on how crypto firms will register in Kenya, and sandbox that will enable business come through before approval.

“Virtual currency businesses have been struggling to get into the CMA sand box because of the lack of a framework. What this draft bill is proposing is a joint regulatory sandbox that will involve CBK, CMA and all other regulators where they can all take part jointly in approving some of these business coming into the sandbox,” said Kimani.

The Sandbox members, to be appointed by the Cabinet Secretary, will include representatives from the Capital Markets Authority, Central Bank of Kenya, Financial Reporting Centre, and a nominee chosen by the Cabinet Secretary responsible for information and communication technology affairs.

The BAK was tasked to draft a framework to govern the cryptocurrency industry because the lack of a framework has led to the mushrooming of dubious cryptocurrency scams that have defrauded Kenyans of millions.

In response to increased interest from new stakeholders, including government agencies and other affected parties, the association, in consultation with its members, has opted to prolong the feedback period for the bill.

The Bill, he said, addresses the industry, consumer and regulator concerns by proposing a licensing framework, consumer protection framework, Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) and a regulatory sandbox.

Regulation of digital assets has been a contentious topic in the past few years with developed countries such as the United States, Hong Kong and Singapore setting the tone for reining in an industry perceived as wild west by mainstream financial regulators.