Kenya: Blockchain Association of Kenya Hosts Inaugural Digital Assets Policy Event

The Blockchain Association of Kenya (BAK) recently organized the inaugural Digital Assets Policy Safari (DAPS) on September 19, with the aim of creating a framework for Kenya’s National Digital Assets Policy.

The primary objective of this gathering was to explore ways to engage with the government in matters of regulatory compliance to foster the adoption of blockchain technology.

Participants were divided into focused groups, each dedicated to enhancing the digital asset ecosystem in various aspects.

One group was tasked with drafting a mock cryptocurrency bill, meticulously shaping an ideal table of contents for a potential Kenyan crypto legislation.

The second group worked on developing a strategic roadmap for engaging with regulators. They brainstormed strategies for collaborating with entities such as the Capital Markets Authority, Central Bank of Kenya, Kenya Revenue Authority, Parliament, and other regulatory bodies.

The third group focused on creating a comprehensive framework for consumer protection and education in the digital asset space.

During the event, prominent figures including Evelyn Wanjiru, a blockchain legal consultant; Fred Ogutu, a tax lawyer and senior associate at Bowmans; Bill Okello, Head of Legal and Regulatory Compliance at Sanduk; and Allan Kakai, Director of Legal and Policy Affairs at BAK, provided insights into the proposed digital asset tax outlined in the Finance Act of 2023.

The Finance Bill of 2023 introduced the concept of Digital Asset Trade as part of the legislation, imposing a three percent tax effective from September 1, 2023.

In their submissions, advocates led by Allan Kakai, Director of Legal and Policy Affairs at the Blockchain Association of Kenya (BAK), expressed their desire for the government to implement specific crypto regulations promptly, a goal the government has indicated it aims to achieve as soon as possible.

However, Kakai raised concerns about the government’s approach to imposing digital asset taxes and called for fair practices to create an equitable environment within the cryptocurrency ecosystem.

The recommendations from the DAPS event encompass strengthening regulations regarding crypto lending and considering the adoption of regulatory sandboxes, which could potentially lead to the recognition of stablecoins as a valid form of payment.

Kakai commented on the tax structure, stating, “Tax is very harmful and it will end up stifling and killing the industry rather than enabling growth. So, from how the tax is structured, our tax on the growth value of the asset means if I’m disposing of an asset whether or not I’m making a profit, I’m still being taxed as opposed to others.”

Regarding regulatory sandboxes, Kakai noted, “The reasons why they specifically never onboarded any digital asset or crypto platform into the sandbox program was that, number one, the results and complexity of the technology, in the sense that the CMA argues that the technology was complex and novel to the extent that it doesn’t have sufficient resources and knowledge around it for them to comfortably onboard digital assets.”

The DAPS event attracted a diverse group of stakeholders, including regulatory authorities, financial institutions, entrepreneurs, startups, legal and compliance experts, academia, investors, blockchain developers, non-governmental organizations, and media representatives.

The event featured a panel of experts, including Duncan Muchangi, Principal at Unicorn Growth Capital; Robert Muoka, Chairman of the Blockchain Sub-Committee of the Law Society of Kenya; Wahome Wilson, Research and Consulting Lead at Lawyers Hub; and Mukiri Mwirigi, Program Manager at the Africa Blockchain Centre. The panel delved deep into the legal and regulatory challenges faced by digital asset companies in Kenya.

Additional participants included Charles Owiti, an advocate at the High Court of Kenya and a patent agent and ICT data expert; Alphonce Odhiambo, President of the Internet Society Kenya Chapter; Brian F. Bilahi, Secretary of the Crypto Taskforce at the Kenya Bankers Association; and Philip Kisaka, Assistant Secretary of the Data Privacy and Governance Society of Kenya (DPGSK).

DAPS received support from esteemed partners, including EthSafari, Sheria Online, Binusu, and Chasing Mavericks.