Kenya Establishes Working Group to Draft Rules Governing Crypto Entities

The Kenyan government recently established a multi-agency technical working group tasked with developing a framework for regulating and monitoring the cryptocurrency industry. The group, which includes financial regulators such as the Central Bank of Kenya, is set to draft rules for controlling and monitoring Virtual Asset Service Providers (VASPs).

FATF Grey Listing Threat

The Kenyan government recently announced the formation of a multi-agency technical working group tasked with developing a regulatory framework for the cryptocurrency industry. The group, comprising Kenyan regulators and the Central Bank of Kenya (CBK), was disclosed in a brief from Treasury Cabinet Secretary Njuguna Ndung’u.

As reported by Bitcoin.com News in late February, concerns that the Financial Action Taskforce (FATF) might add the East African nation to its grey list due to its failure to regulate the crypto industry led authorities to consider creating a body to oversee this sector. The authorities said the proposed body would be responsible for drafting regulations for the Kenyan crypto sector, but no commencement date was provided.

Online Marketing of Virtual Assets Proliferates

Meanwhile, a report from Business Daily suggests that the multi-agency working group is expected to draft rules to regulate and monitor virtual asset service providers (VASPs) and the use of virtual assets in the country. Ndung’u meanwhile is quoted in the report explaining the importance of having such a regulatory framework. He said:

“Due to the emergence of online marketing of virtual assets and online fraudulent investment options, CBK and other financial sector regulators issued notices warning the public against the use of unlicensed financial products and services.”

Although the Kenyan Treasury Cabinet Secretary does identify unlicensed products that residents should avoid, the Business Daily report implied that Worldcoin was one of the VASPs operating without approval. An investigation by Kenya’s Directorate of Criminal Investigations discovered that as much as $18.5 million (KES2.5 billion) was irregularly injected into the economy in 2023.

While Worldcoin was eventually compelled to cease its activities, interest in cryptocurrencies remains high among Kenyans, and many continue to fall victim to crypto-related scams. However, Kenyan authorities believe that the establishment of the regulatory framework will help mitigate scams and provide investor protection.