Kenyan President William Ruto recently announced a major policy shift in the country’s approach to cryptocurrency, appointing U.S.-based Bitcoin mining company Marathon Digital as its consultant. This move marks a departure from the previous defiant stance of institutions like the Central Bank of Kenya (CBK) towards cryptocurrencies. Marathon Digital will collaborate with the National Treasury and the Energy Ministry to address energy requirements associated with cryptocurrency mining. Ruto’s decision contrasts with the caution expressed by former CBK governor Patrick Njoroge, who warned against crypto involvement and proposed imprisonment for considering Bitcoin as a reserve asset.
In efforts towards cryptocurrency regulation, Kenya has formed a multi-agency team that includes the central bank. The country has shown a willingness to explore regulatory frameworks for cryptocurrencies, collaborating with organizations like the Kenyan Blockchain Association. In December 2023, the Kenyan National Assembly committee approved the Capital Markets Bill, which, if passed into law, would introduce taxation on cryptocurrency exchanges and wallets. This move mirrors the taxation framework applied to traditional banking transactions, signaling Kenya’s momentum towards crypto adoption.
On April 23, NTV Kenya reported the establishment of a multi-agency working group tasked with developing rules and oversight for cryptocurrencies, also known as virtual assets, and entities dealing with them, such as Virtual Asset Service Providers. Kenyan National Treasury Cabinet Secretary Prof. Njuguna Ndung’u disclosed the formation of this group to the National Assembly, citing concerns raised by regulators regarding unlicensed virtual asset products and the risks of money laundering and terrorist financing associated with virtual assets. Kenya’s 2022 anti-money laundering report also emphasized the need for regulatory measures in virtual asset sectors.
The decision to appoint Marathon Digital as a consultant for cryptocurrency consultations signals a significant shift in Kenya’s approach to cryptocurrencies. While former CBK governor Patrick Njoroge had warned against crypto involvement and proposed imprisonment for considering Bitcoin as a reserve asset, the current government under President William Ruto has shown a willingness to explore regulation instead of outright prohibition. Kenya has taken steps towards cryptocurrency regulation by forming a multi-agency team that includes the central bank, with the approval of the Capital Markets Bill in December 2023 marking a significant development.
Collaborative efforts with organizations like the Kenyan Blockchain Association have been initiated to draft regulatory frameworks for cryptocurrencies in Kenya. The establishment of a multi-agency working group to develop rules and oversight for virtual assets and Virtual Asset Service Providers further solidifies Kenya’s commitment to regulating the crypto sector. Concerns raised by regulators regarding unlicensed virtual asset products and the risks of money laundering and terrorist financing associated with virtual assets have prompted the government to take proactive measures towards regulation. Kenya’s 2022 anti-money laundering report and the uncovering of suspicious M-Pesa withdrawals linked to the now-suspended Worldcoin project have underscored the need for regulatory measures in the virtual asset sector.
