Kenya needs Sh1.82bn to develop cryptocurrency laws – Treasury
Kenya needs Sh1.82bn to develop cryptocurrency laws – Treasury
The National Treasury estimates that the country will require Sh1.82 billion to formulate and publicise regulations for the use of cryptocurrency and digital tokens in the country.
Estimates contained in the Treasury’s Draft National Policy on Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs) shows the bulk of the amount will be spent on coming up with the regulations as the country pushes to curb tax evasion, fraud, cybercrime amid growing use cryptocurrencies.
A VA is a digital representation of value that can be digitally traded, or transferred, and can be used for payment or investment purposes or for other purposes that could arise.
The implementation matrix shows Treasury plans to spend Sh800 million on activities such as developing a comprehensive and progressive law aligned with international standards, anti-money laundering, combating the financing of terrorism and counter-proliferation financing requirements and best practices.
This comes after the National Treasury proposed a regulatory framework to oversee cryptocurrencies and digital tokens in Kenya, aiming to tackle tax evasion, fraud, and cybercrime as the use of these assets grows.
A Draft National Policy on Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs) has been issued, seeking public input to finalise a document that will shape the regulation of digital assets.
According to the Treasury, the draft policy is informed by experiences from other countries, adopting flexible frameworks that support domestic and international cooperation while balancing regulatory compliance and financial innovation.
The Treasury said the proposal reflects Kenya’s shift from considering a ban on virtual assets to integrating them into the formal economy under clear regulations.
“This policy guides the establishment of a sound legal and regulatory framework providing the fundamental foundation of a fair, competitive, and stable market for VAs and VASPs with the aim of fostering innovation, enhancing financial literacy, and ensuring sound risk management,” the draft document reads.
The Treasury noted that the principal goal of the policy is to position Kenya as a key player in the global digital finance ecosystem.
The Treasury terms a virtual asset as a digital representation of value that can be traded, transferred, or used for payments and investments.
According to the document, the increasing popularity of virtual assets in Kenya is driven by public interest in alternative investments, the efficiency of cross-border transactions, and the pseudonymous nature of these assets.
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However, the Treasury has raised concerns about risks associated with the unregulated use of cryptocurrencies, including money laundering, terrorism financing, tax evasion, fraud, and cybercrime.
“These risks underscore the urgent need for a comprehensive legal and regulatory framework to govern VAs and VASPs to ensure the safety and integrity of Kenya’s financial system,” Treasury Cabinet Secretary John Mbadi said.
Mbadi added that the adoption of this policy would provide a secure and well-regulated environment for virtual assets in Kenya.
“This is a significant step towards creating a fair and stable market for these innovations while addressing the associated risks,” he said.
The policy development comes shortly after the International Monetary Fund (IMF) backed Kenya’s efforts to regulate crypto activities. In a technical assistance report requested by the Capital Markets Authority (CMA), the IMF pledged to provide support in drafting regulations.
The framework, which incorporates Financial Action Task Force recommendations, is expected to be implemented by April 2025.
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