The International Monetary Fund (IMF) has called on President William Ruto’s administration to modernize Kenya’s cryptocurrency regulations to meet global standards, addressing rising concerns over money laundering and terrorism financing linked to digital assets. The IMF’s report highlights the growing need for a comprehensive regulatory framework in light of Kenya’s substantial crypto transactions, estimated at KES 2.4 trillion between 2021 and 2022.
The IMF pointed out that Kenya’s existing regulations, designed for traditional financial markets, are insufficient to tackle the unique challenges posed by digital currencies. The report emphasized the need for a clear legislative framework that includes specific definitions and classifications of crypto assets, along with effective inter-agency cooperation and market monitoring.
“There is a need for a clear legislative framework with specific definitions and classifications of crypto assets, effective inter-agency cooperation, and continuous market monitoring,” the IMF stated. This call for action is directed at Kenya’s Capital Markets Authority (CMA), urging swift steps to address regulatory gaps in the crypto sector.
The IMF outlined a phased approach for Kenya to build a comprehensive and effective regulatory framework. In the short term (6–12 months), it recommended conducting empirical research to assess the scope and risks of crypto assets, offering training to regulators, and fostering inter-agency cooperation. Over the medium term (12–24 months), the IMF suggested developing a legal and licensing framework for cryptocurrency operations, enhancing supervisory regulations, and collaborating with foreign regulators to manage risks linked to cross-border exchanges.
The IMF further emphasized the importance of working with international financial bodies like the Financial Action Task Force (FATF) to ensure robust oversight and mitigate risks. It noted that Kenya’s growing involvement in cryptocurrencies presents both opportunities and challenges, stressing the need to balance market innovation with protecting the financial system from exploitation.
