The Republic of Kenya is currently moving towards establishing a legal framework for the operation of cryptocurrencies. Interestingly, this rather exciting development comes just after the International Monetary Fund (IMF) advised the East African country to overhaul its current crypto policy and bring it in line with global standards.
Kenya aims to regulate cryptocurrencies
As part of its efforts to adopt a more comprehensive approach to the cryptocurrency industry, the Kenyan government, through the National Treasury and Economic Planning Department, has called for public consultation on the proposed regulatory structure.
The framework is structured around two documents, one of which is the Draft National Policy on Virtual Assets (VA) and Virtual Asset Service Providers (VASP), which provides guidance for the governance of VAs and VASPs. , aims to ensure fair and efficient markets. All stakeholders, among other purposes.
The second document is a bill titled the “Virtual Asset Service Providers Bill 2025,” which focuses on the designation of regulators and licensing requirements for VASPs. The bill also emphasizes VASP’s general obligations regarding the prevention of money laundering, terrorist financing, and proliferation financing.
Public consultation on both documents will run until January 24, before which all Kenyans and interested parties are invited to submit their views on the proposed cryptographic framework.
Kenya to withdraw anti-crypto stance
In 2015, the Central Bank of Kenya banned the use of cryptocurrencies as legal tender and issued a warning against their use. However, with around 2.8 million Kenyans being cryptocurrency holders, the movement for digital assets remains strong in the East African country.
With a call for public consultation on the proposed cryptocurrency regulatory structure, the Kenyan government appears ready to embrace the potential of this nascent industry.
This sudden move to legalize crypto assets marks a significant change in policy, said John Mbadi, the country’s Minister of Finance and Economic Planning. According to local media outlet Saturday Standard, Mbadi said:
The emergence and growth of virtual assets (VAs) and virtual asset service providers (VASPs) has brought innovation to domestic and international financial systems with dynamic opportunities and challenges.
The Cabinet Secretary also recognizes the current woes of the cryptocurrency industry, including fraud and money laundering, but believes these risks can be contained with an efficient regulatory system.
As mentioned earlier, Kenya’s U-turn to crypto came on the heels of a nudge by the IMF. In a technical assistance report, the UN financial institution recommended that Kenya strengthen virtual currency regulation through the introduction of a clear legal framework and ensure consumer protection through financial literacy.
At the time of writing, the cryptocurrency market capitalization is valued at $3.21 trillion, following a 0.55% loss over the past day.
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