• Kenya is set to legalize cryptocurrency trading with new regulations.  
• The government aims to balance innovation with risks like fraud and money laundering.  
• Despite past restrictions, 10% of Kenyans hold cryptocurrency, signaling a shift. 

Kenya has noted a “yes” to the future of digital finance by legalizing crypto trading. Treasury Cabinet Secretary John Mbadi announced that the government is building a legal framework to regulate crypto, including Bitcoin.

JUST IN: 🇰🇪 Kenya to legalize Bitcoin and crypto.

— Watcher.Guru (@WatcherGuru) January 10, 2025

This move comes after years of restrictions that banned digital currencies in East Africa. But despite the ban, people kept using digital assets on the underground market, showing the need for clear rules.

The new legislation, which is still being drafted, aims to make a fair and competitive market for Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs). It will also focus on risks like money laundering, terrorism financing, and fraud.

John Mbadi pointed out that the government wants to balance innovation with risk management. He noted that the regulations are meant to harness the benefits of digital assets while addressing the challenges.

It’s worth noting that Kenya has been a leader in financial innovation with Safaricom’s M-Pesa mobile money service, which revolutionized financial accessibility in the country back in 2007.

The Risks and Rewards of Crypto

While the benefits of digital assets are clear, Mbadi also pointed out the risks, including money laundering, tax evasion, fraud, cybercrime, and weak consumer protection.

He cited the national risk assessment report on Virtual Assets (VAs) and Virtual Asset Service Providers, which was finished in September 2023, to highlight these issues.

To tackle these challenges, the government wants to build a stable market that encourages innovation while protecting against financial crimes.

Kenya’s Experience with Cryptocurrencies

Kenya’s relationship with digital assets has been complicated. In 2015, the Central Bank warned against using them and banned virtual currencies as legal tender. But a UN report from 2022 showed that almost 10% of Kenyans owned cryptocurrency.

Read also: Kenya Collected $77.5M in Crypto Taxes — $465M Target Next, Exchanges in Focus

The nation plans to release its Draft National Policy on Virtual Assets and Virtual Asset Service Providers, which will guide the creation of a legal and regulatory system for the crypto industry.