The Central Bank of Kenya has issued a new policy regulating cryptocurrencies and digital tokens in order to combat tax evasion, fraud and cybercrime amid the increasing use of these currencies.
The National Draft Virtual Assets (VA) and Virtual Service Providers (VASP) Act has been published, seeking public consultation to finalize information that will affect digital asset management.
“The policy takes account of regulatory approaches from various jurisdictions and provides a framework that is adaptive and flexible for domestic and international cooperation, compliance, consumer protection, financial innovations, and management of risks,” Treasury CS John Mbadi said.
According to data from Statista, over 700,000 Kenyans use cryptocurrency and the value of the market is set to hit US$40 million this year.
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The Ministry of Finance said the bill draws on the experiences of other countries and adopts a flexible model that encourages national and international cooperation while assessing regulatory compliance and fiscal development.
The Ministry of Finance said the proposal reflects Kenya’s decision to limit virtual assets and integrate them into the legal market under open regulation.
Kenya’s cryptocurrency market thrives in regulatory uncertainty due to a lack of trust in financial institutions such as the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA).
In 2015, when the markets were just starting to take off, the Central Bank warned Kenyans not to trade in the assets. They also ban financial institutions from dealing in virtual currencies.
The Ministry of Finance stated that the main objective of the policy is to position Kenya as a major player in the global digital finance ecosystem.
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The Financial Services Authority defines virtual assets as digital representations of value that can be traded, converted or used for payments and investments.
According to the data, virtual assets are the most popular asset in Kenya due to the public’s interest in alternative investment options, cross-border transactions and The name of these assets.
