Key Takeaways
- Kenya’s emerging cryptocurrency sector is facing a regulatory challenge, with concerns growing over the link between cryptocurrency exchanges and a proposed VASP Bill in Kenya.
- Local crypto startups are concerned about the inclusion of the Virtual Asset Chamber of Commerce (VAC), which Binance allegedly backs, as they believe it could compromise fair competition and regulatory independence.
- Local crypto stakeholders question the transparency and impartiality of VAC’s role, highlighting potential conflicts of interest in Kenya’s crypto regulatory framework.
Controversy is brewing in Kenya as local crypto startups raise concerns over a proposed VASP bill in Kenya, warning that a Binance-linked lobby group could get greater influence and potentially undermine fair competition in the country’s budding digital asset industry.
Emerging reports indicate that local crypto startups are concerned about the involvement of a group called the Virtual Asset Chamber of Commerce (VAC), a private think tank, within the regulatory board tasked with developing the proposed Virtual Asset Service Providers (VASP) Bill.
Questions about VAC’s Independence
The critics pointed out that similar concerns had been raised over VAC’s alleged involvement in similar regulatory discussions in Rwanda, highlighting a broader pattern of influence across African crypto markets. They have also argued that VAC has previously hosted Binance-sponsored regulatory talks, raising questions about its independence and whether it acts as a proxy for the global crypto exchange. According to local stakeholders, VAC has previously had financial ties with the cryptocurrency exchange Binance, raising doubts about its impartiality in working on the proposed VASP bill in Kenya. Speaking to the media, a stakeholder with information about the ongoing discussions stated:
“All regulation conversations by VAC that happened recently have been sponsored by Binance. Then VAC, a private consulting entity with a non-compete with Binance, ‘magically’ gets a regulatory seat? How is this fair?”
Kenya Faces FATF Assessment Deadlines
The report further alleged that Binance pays VAC at least $6,000 per month for every country it is involved in for policy advocacy, fearing that the group may have unduly influenced the proposed VASP bill in Kenya in favor of Binance at the expense of other market participants. In the same vein, different stakeholders are concerned that entities with a conflict of interest may be involved in developing the proposed regulations, which could lead to Kenya being blacklisted by the Financial Action Task Force (FATF) and the EU, a move that could hinder the country’s access to global financial systems.
Kenya faces FATF assessment deadlines and must address money laundering risks in the cryptocurrency market. The Eastern and Southern Africa Anti-Money Laundering Group closely monitors Kenya’s progress. The proposed VASP Bill in Kenya includes a 3% digital asset tax, which has sparked sharp debate among stakeholders. The Kenyan government maintains that taxation ensures proper revenue allocation; however, critics claim that punitive tax measures may deter investment and innovation. Kenya expects to see investment growth similar to South Africa, which experienced positive results after passing crypto-friendly regulations.
Conclusion
Kenya’s emerging cryptocurrency regulatory landscape stands at a pivotal moment, with the proposed VASP Bill in Kenya designed to shape the future of digital asset governance. The controversy surrounding the involvement of Binance-linked VAC highlights the importance of fairness and transparency during the regulatory process. Stakeholders will need to adopt a collaborative and balanced approach to foster a robust, competitive, and compliant cryptocurrency ecosystem in Kenya.
Frequently Asked Questions
Is cryptocurrency allowed in Kenya?
The Central Bank of Kenya reiterates that Bitcoin and similar products are neither legal tender nor regulated in Kenya. The CBK urges the public, therefore, to desist from transacting in Bitcoin and similar products.
Is crypto taxable in Kenya?
Kenyan authorities have instituted a controversial 3% digital asset tax (DAT) to be charged on the gross value of cryptocurrency transactions, regardless of profit or loss.
What is the status of the crypto bill in Kenya?
Investors in the cryptocurrency market are urging Parliament to reduce the Sh10 million fine prescribed in the Virtual Asset Service Providers (VASPs) Bill, 2025, arguing that it is excessively punitive.
