Kenya intensifies cryptocurrency regulation efforts in response to Financial Action Task Force (FATF) grey listing
Kenya, a leading African country in cryptocurrency adoption, has been under the spotlight recently due to concerns about anti-money laundering (AML) and counter-terrorist financing (CTF). The Financial Action Task Force (FATF) added Kenya to its grey list last week, citing crypto-related money laundering as a major concern.
In October 2023, Kenya's parliament tasked the Blockchain Association of Kenya with creating the first draft of what could become a virtual asset service provider's bill. This move was in response to an ESAAMLG assessment in 2022, which highlighted the lack of crypto regulatory oversight as posing ML and TF risks.
The FATF identified several deficiencies in Kenya's AML and CTF regime, and gave the country 12 months to address these issues. However, the elapsed 12-month period ended in October 2023, raising concerns about Kenya's compliance.
In a bid to address these concerns, the government published the draft virtual currency service provider legislation in January 2024. This legislation, developed by the Blockchain Association of Kenya, aims to establish regulatory control over the digital currency and asset market in Kenya. The step is intended to provide a structured legal framework to oversee and regulate crypto activities, enhancing security and compliance within the growing digital asset sector.
The first-ever virtual assets service provider bill in Kenya was released for public feedback by January 2024. The bill is expected to provide clarity on the regulation of cryptocurrencies, addressing the absence of precise cryptocurrency regulation that has been identified as a risk.
The first draft of the bill was developed by the Blockchain Association of Kenya, the same organisation that was tasked by the parliament to create the bill. The association has been instrumental in driving the development of Kenya's cryptocurrency landscape.
As Kenya navigates the complexities of regulating cryptocurrencies, it continues to be a trailblazer in Africa's digital asset sector. The publication of the draft bill is a significant step towards establishing a robust regulatory framework that balances innovation with security and compliance.
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