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BAK, a digital asset industry lobby group, has submitted the Virtual Asset Service Provider (VASP) bill to the National Assembly, advocating for the establishment of a regulatory sandbox. The proposed sandbox aims to test and regulate cryptocurrency players before granting them licenses to operate.
Michael Kimani, the Chair of the Blockchain Association of Kenya, explained that the bill outlines a licensing framework for crypto firms to register in Kenya. Additionally, it introduces a joint regulatory sandbox involving the Central Bank of Kenya (CBK), Capital Markets Authority (CMA), and other regulators, allowing them to collectively approve businesses entering the sandbox.
According to Kimani, the members of the sandbox will be appointed by the Cabinet Secretary and will include representatives from the Capital Markets Authority, Central Bank of Kenya, Financial Reporting Centre, Nairobi International Financial Centre, Law Society of Kenya, Competition Authority of Kenya, and the Kenya Revenue Authority.
The need for a regulatory framework stems from the rise of dubious cryptocurrency scams defrauding Kenyans due to the absence of proper guidelines. The proposed VASP Bill addresses concerns related to the industry, consumers, and regulators by presenting frameworks for licensing, consumer protection, Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF), and a regulatory sandbox.
While digital asset regulation has been a global challenge, developed countries like the United States, Hong Kong, and Singapore have set precedents for reining in the industry. In Africa, countries such as Nigeria and South Africa have already implemented regulations to manage the cryptocurrency sector, addressing concerns about capital flight and criminal activities like money laundering.
The draft VASP Bill, if enacted, positions Kenya as a digital asset hub and is anticipated to contribute to increased tax revenues for the National Treasury. The bill represents a collaborative effort between stakeholders to shape a regulatory landscape for the cryptocurrency industry in Kenya.
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