Kenyan financial watchdog seeks public input on cryptocurrencies

Kenya has taken a step forward in its bid to regulate and establish a safe and secure environment for digital assets. The country’s Financial Reporting Centre (FRC) is inviting residents to participate in its ongoing public survey on virtual assets (VAs) and virtual assets service providers (VASPs). 

Key details  

• The FRC is a government agency established by law to assist in identifying money laundering and terrorist financing in Kenya. 
• In a statement, the Centre acknowledges the rapid growth of the digital asset ecosystem and its potential to drive financial innovation and efficiency.  
• Still, as with most regulatory bodies globally, the FRC is concerned that the cryptocurrency market could be used for illicit activities such as money laundering and terrorism financing.  
• The FRC proposed that anonymous feedback could help authorities better understand the cryptocurrency ecosystem. 
• Interested individuals are to complete the survey by Sept. 8, 2023, via a six-page form on the FRC website.

What was said 

“Virtual assets and associated activities have grown rapidly around the world over the recent years. While this space has the positive potential to spur financial innovations and efficiency, it can also present opportunities for illicit activities like money laundering and terrorism financing, among others.

“As part of the mission to protect the integrity of our financial system and contribute to the safety of our citizens, the Financial Reporting Centre is inviting the public to share their thoughts through a short survey to help us understand the Kenyan ecosystem of virtual activities and service providers, along with their benefits and potential money laundering & terrorism financing risks.” 

Why it matters  

• Kenya is one of the world’s leading countries for cryptocurrency adoption, given that about 4.25 million Kenyans own and deal in digital currencies, according to a United Nations Conference on Trade and Development (UNCTAD) report in 2022. 
• Notwithstanding the Central Bank of Kenya’s firm stance against cryptocurrency, the country appears to be inching towards regulating the space. 
• In May, Kenya disclosed its plans to impose taxes on platforms that facilitate trading cryptocurrencies and other digital assets. The new regulation requires exchanges to pay a 1.5% duty on each successful transaction. 
• This initiative came several months after introducing a bill mandating crypto holders to provide precise details about their digital assets to the Capital Markets Authority.