This is Ogechi from Mariblock. As usual, I am delighted to bring you the highlights of last week’s biggest stories in the African blockchain and digital assets scene.
Africa undoubtedly boasts of a thriving crypto scene. While relatively small, it’s one of the fastest-growing global markets. Leading the charge is Kenya, but the government’s tax proposals for cryptocurrencies and service providers have raised eyebrows.
Last week, we did a deep dive into Africa’s booming cryptocurrency landscape, with a spotlight on Kenya’s regulatory developments.
In case you missed it, the Reuters Institute for the Study of Journalism featured us. They wrote about the work we’re doing to elevate fair and equitable information about crypto in Africa. Read it here.
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Kenya’s digital asset tax: death knell for crypto adoption?
Topline: While Africa’s crypto market is one of the smallest globally, it undoubtedly ranks among the world’s swiftest-growing hubs. Some African countries have seen these crypto activities more than others, but arguably none more than Kenya. (Details)
- However, the Kenyan government has seized the spotlight within the cryptocurrency sphere, arousing global curiosity regarding its underlying objectives.
Notably, it has introduced not just one or two but three distinct tax proposals targeting cryptocurrencies and their service providers.
- On September 1, the new digital assets tax (DAT), an amendment to Kenya’s Financial Act 2023, came into effect. This regulation imposes a 3% tax on income from transferring or exchanging digital assets.
Quick DAT facts: The amendment requires centralized exchanges in the country to collect and deduct a 3% tax whenever their users exchange or transfer their assets.
- These exchanges must send these taxes to the Kenyan Revenue Authority (KRA) within five days.
- The tax is calculated based on the income generated from transferring crypto assets.
Blurry lines: A closer look at the new regulation spotlights some unclarities.
- The law defines income from exchanging a digital asset as the “gross fair market value” received from a transaction.
- Given that the prices of assets can vary slightly across exchanges, it’s unclear how the KRA would determine the fair market value.
Zoom out: The introduction of the DAT has not gone down smoothly with players in the Kenyan crypto scene. The Blockchain Association of Kenya (BAK) announced that it was suing the Kenyan government over the DAT.
- BAK’s legal director, S. A. Kakai, highlighted a contradiction between the new law and the Central Bank of Kenya’s stance on crypto.
- Kakai predicts centralized exchanges like Binance and Yellow Card may be most affected, potentially driving users towards decentralized exchanges beyond government oversight.
- Binance told Mariblock that DAT’s structure could compel exchanges to use their funds for tax payments due to tight deadlines and users’ limited fiat currency for prompt tax payment.
Btrust, cofounded by Jack Dorsey and Jay Z, acquires African Bitcoin talent development firm Qala
Topline: Btrust, a Bitcoin non-profit backed by Jack Dorsey and Jay-Z, has scooped Qala, a training program for African Bitcoin engineers. (Details)
- The deal was completed on September 1, with the financial terms undisclosed.
Of note: Following the acquisition, Qala rebranded to Btrust Builders Programme and is inviting senior software developers on the continent to dive headfirst into Bitcoin and Lightning development.
Why this matters: A Google report found that despite 60% of Africa’s 1.5 billion population being under 25 years old, only 700,000 are software developers. Furthermore, the number of developers working on Bitcoin’s open-source technology is even smaller.
- Femi Longe, the CEO of Qala, told Mariblock that due to the shortage, only a limited number of products tailored to African cultural and economic contexts have been created.
- To fix this divide, Qala set out to discover and educate a community of African Bitcoin developers specializing in tailoring solutions for the African environment.
- However, Qala relies on grants and outside funding and faces challenges securing funding. The organization is susceptible to Bitcoin market movements, spending more in bull markets and less in bear markets.
Btrust as a solution: Btrust, on the other hand, is a non-profit fund dedicated to furthering the open-source development of Bitcoin by training and empowering developers to work exclusively on building for Bitcoin.
- Btrust’s acquisition of Qala helps to further both organizations’ goals, which are similar — building Bitcoin-focused African developers. It also helps resolve Qala’s challenges with funding.
Worldcoin probe: project CEO appears before Kenyan parliament
Topline: The decentralized ID protocol, Worldcoin, took center stage in Kenya’s parliament on September 6, where it was summoned to address pressing concerns regarding the legality of its activities within the country. (Details)
Key context: In the same meeting, journalists were barred from gaining access due to the scheduled testimony of the country’s Director of Criminal Investigations (DCI), Mohamed Amin, before the committee.
- Worldcoin CEO Alex Bania, accompanied by the company’s chief legal officer, Thomas Scott, was summoned before the 15-man ad hoc committee entrusted with investigating Worldcoin’s operations.
The details: Bania and Scott appeared before the parliamentary committee. Here are some takeaways from the hearing.
- Scott argued that Worldcoin and Tools for Humanity are not legally required to register locally in Kenya, as they do not qualify as businesses or service providers under the country’s constitution.
- According to him, the company was duly certified as a data controller. He added that Kenyan laws allow it to be a data controller yet not register locally.
- Bania said that Worldcoin does not intend to replace the government’s ability to issue IDs or currencies but rather to provide a protocol that governments can use to issue legal identities.
- Scott told the committee that the Central Bank of Kenya (CBK) does not regulate cryptocurrencies. Instead, it warns crypto companies to engage in people-centered approaches and keep their users aware of the risks involved. He added that Worldcoin follows these guidelines by highlighting the advantages and risks of cryptocurrencies on its website.
Ecosystem: B<>rder/ess is empowering youth to gain tech skills for free
Topline: B<>rder/ess (Borderless) is a non-profit tech organization seeking to train at least 100 African tech developers each year to build Web2 and Web3 products. (Details)
The company is on a sponsorship drive for its Borderless 2.0 goals, including:
- Open a developer hub at the University of Port Harcourt, Nigeria.
- Sponsor 500 university students to learn tech skills.
- Sponsor 100 laptops for the most exceptional students.
- Sponsor 1000 students with a productivity tool.
For information on how to be a Borderless sponsor, write an email to [email protected]
Coming soon: Mariblock Roundtable
Topline: Mariblock’s top priority is fostering impactful conversations that drive the advancement of the African blockchain and digital assets space.
- We see stakeholder engagement as a significant part of that.
- Mariblock Roundtable will bring builders, talents, investors, enthusiasts and regulators around the continent together to engage in discussions that move the needle for the industry.
- This won’t be a crypto/blockchain education series.
- We’re open to partnerships. Do reply to this email if you’d like to learn more.
🇿🇦CryptoConvert partners with VALR and Luno to enable Bitcoin payments at Pick n Pay stores. (Mariblock)
🇿🇦 MTI CEO ordered to pay $1.7 billion in restitution for bitcoin Ponzi scheme. (Mariblock)
🇰🇪Inside Kotani Pay’s plan to bridge Africa’s financial divide through cryptocurrency. (Mariblock)
🇲🇦 Binance airdrops $3 million in crypto to Morocco earthquake victims. (Mariblock)
🇨🇲 Crypto adoption on the rise in Cameroon, amidst growing concerns of Ponzi schemes: study (Mariblock)
🌎 Fighting corruption: Does Bitcoin fix West Africa? (Bitcoin Magazine)
🇳🇬 Base Ecosystem Fund, Hashed Emergent invest $1.9M in Nestcoin to scale its Onboard product (Techcrunch)
I’d love to hear from you ✍🏾
What are your thoughts about this newsletter?
What are we doing well, and what should we improve on?
Hit the reply button, and let’s talk — even if it’s a reaction to any of the stories covered here.
I look forward to hearing from you.
That’s it for this week.
See you next week.