The Blockchain Association of Kenya (BAK) is poised to introduce Kenya’s inaugural community-led Virtual Assets Service Provider (VASP) draft Bill, marking a significant milestone for the nation’s burgeoning digital asset sector.
Published on January 22, 2024, the Bill is now open for public scrutiny and has witnessed an influx of contributions, feedback, and critique from the digital asset community associated with the lobby group.
Aiming for Regulatory Clarity
This development follows a directive three months ago, compelling the industry lobby group, born out of the community, to formulate a draft bill for the regulation of crypto assets in Kenya. Michael Kimani, Founder and Chairman of BAK, expressed that the Bill represents a substantial stride towards realizing their vision of establishing a digital asset hub, aligning with the stature of developed countries such as Singapore and Dubai.
Kimani articulated, “Since the inception of our organization in 2017, we have aspired to witness Kenya ascend to the status of a digital asset hub.”
Addressing Concerns through Comprehensive Frameworks
He highlighted that the Bill is crafted to tackle concerns from the industry, consumers, and regulators by proposing a comprehensive licensing framework, consumer protection measures, Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) protocols, and the establishment of a regulatory sandbox.
Open Invitation for Stakeholder Participation
BAK has extended an invitation to all stakeholders, encompassing individuals from Kenya, Africa, and globally, to review, provide comments, and offer feedback until February 7. The organization plans to incorporate this input into the subsequent version of the Bill, scheduled for submission to the National Assembly’s Departmental Committee on Finance and National Planning by February 14.
Allan Kakai, BAK’s Director of Public Policy and Regulatory Affairs, emphasized the need for collaboration among legal professionals, regulatory authorities, and Virtual Assets industry players to effectively navigate the regulatory challenges associated with digital assets, fostering innovation and growth in the blockchain ecosystem.
Unlocking Financial Potential for Kenya
Paul Gachora, BAK CEO, underscored the potential of digital assets and blockchain as an avenue for the Kenyan Government to explore new fundraising mechanisms. Gachora stated, “Our goal is to help Kenya raise $1 billion in foreign direct investments by 2027, aligning with Kenya’s medium-term economic plan.”
He added, “The draft Virtual Assets Service Provider Bill is the culmination of months of collaborative work that started in April 2023.”
Global Regulatory Landscape and Africa’s Response
The regulation of digital assets has been a contentious issue globally, with developed nations like the United States, Hong Kong, and Singapore taking steps to rein in an industry perceived as the “wild west” by mainstream financial regulators. In Africa, countries like Nigeria and South Africa have already implemented regulations to manage the industry, addressing concerns related to capital flight and criminal activities such as money laundering.
A Paradigm Shift for Kenya’s Digital Landscape
The potential passage of the draft VASP Bill positions Kenya as a prominent player in the digital asset landscape. If enacted, the bill is anticipated to result in an influx of tax revenues into Kenya’s National Treasury.
In conclusion, stakeholders impacted by the Draft VASP Bill are encouraged to provide feedback, actively participating in the ongoing development. The next phase in the digital asset policy journey involves the formulation of a report to accompany the bill for parliamentary approval and a pilot demonstration showcasing the potential of digital assets and blockchain to support Kenya’s economic recovery.
