The National Treasury of Kenya has estimated that KES 1.82 billion will be required to develop and publicize regulations for cryptocurrency and digital tokens. This initiative aims to combat tax evasion, fraud, and cybercrime, as the use of digital assets continues to grow. The funds will primarily be allocated to creating a comprehensive legal framework for virtual assets (VAs) and virtual asset service providers (VASPs), according to the Treasury’s Draft National Policy on VAs and VASPs.
The implementation matrix indicates that KES 800 million will be dedicated to building a legal framework that aligns with international standards. This includes measures for anti-money laundering, combating terrorism financing, and adhering to counter-proliferation financing best practices.
This push for regulation comes after the International Monetary Fund (IMF) urged President William Ruto’s administration to modernize Kenya’s cryptocurrency laws. In a report released on January 9, the IMF highlighted concerns over money laundering and terrorism financing linked to digital assets. Between 2021 and 2022, the Kenya Revenue Authority (KRA) estimated that crypto transactions in the country amounted to KES 2.4 trillion.
The IMF recommended a phased approach for regulatory development, starting with research and capacity building in the short term and evolving into a legal and licensing framework in the medium term. The IMF also emphasized the importance of inter-agency cooperation and collaboration with international regulators.