Kenyan Government Establishes Working Group to Regulate Cryptocurrency Industry

The Kenyan government has formed a multi-agency technical working group tasked with developing a regulatory framework for the cryptocurrency industry. This group, which includes regulators such as the Central Bank of Kenya (CBK), aims to draft rules for controlling and monitoring Virtual Asset Service Providers (VASPs).

Concerns about potential grey listing by the Financial Action Taskforce (FATF) due to Kenya’s lack of crypto regulation prompted authorities to create the working group. The absence of regulations has led to the proliferation of online marketing of virtual assets and fraudulent investment schemes, prompting warnings from financial regulators.

Treasury Cabinet Secretary Njuguna Ndung’u emphasized the need for a regulatory framework to address the emergence of virtual asset trading and online fraud. While some unlicensed VASPs, like Worldcoin, have operated in Kenya, authorities have cracked down on such entities to protect investors and prevent irregular injections of funds into the economy.

Despite challenges with crypto-related scams, there is significant interest in cryptocurrencies among Kenyans. Establishing a regulatory framework is seen as essential for mitigating scams, protecting investors, and ensuring the responsible growth of the cryptocurrency industry in Kenya.

The formation of the working group marks a significant step towards regulatory clarity in the Kenyan cryptocurrency market, providing a foundation for a safer and more transparent digital asset ecosystem.