Kenya Unveils Draft Policy to Regulate Virtual Assets and Service Providers

Kenya’s Treasury Cabinet Secretary, John Mbadi, has announced plans to introduce a draft policy aimed at regulating virtual assets and virtual asset service providers. The proposed framework seeks to balance the opportunities presented by cryptocurrencies while addressing associated risks, such as money laundering, terrorism financing, and fraud.

According to Mbadi, the Kenyan Government is committed to creating a legal and regulatory framework that enables virtual assets and service providers to reap the benefits. The draft policy, introduced in December, aims to foster a fair, competitive, and stable market for industry participants while promoting innovation and financial literacy.

Global Regulatory Trends

Mbadi pointed to the global trend toward regulating cryptocurrencies, citing examples from Morocco, the United States, and Russia. This move is in line with international efforts to establish clear guidelines for the virtual asset sector.

Africa’s Fintech Landscape

Africa is home to a rising number of fintech unicorns that provide payment solutions to the region’s largely unbanked population. Kenya’s framework will adopt flexible regulatory approaches to align with international standards and support this growth.

Anti-Money Laundering Efforts

The Financial Action Task Force (FATF) urged Kenya in 2024 to enhance its anti-money laundering efforts and strengthen measures against terrorism financing. The FATF’s actions could impact Kenya’s trade and investment costs, making the introduction of a regulatory framework even more crucial.

Benefits of the Policy

If adopted, the policy could position Kenya as a major player in digital finance by safeguarding consumers and ensuring compliance with global regulatory standards. The benefits of the policy include:

  • Protection of consumers
  • Promotion of innovation and financial literacy
  • Alignment with international regulatory standards
  • Support for the growth of fintech unicorns

“The Kenyan Government is committed to creating a legal and regulatory framework that will enable virtual assets and service providers to reap the benefits.”

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