Kenya has revised its Virtual Asset Service Providers Bill, 2025, in a bid to strengthen its regulatory framework for the cryptocurrency sector. The updated bill introduces strict requirements, including mandating crypto firms to:
This move aligns with Kenya’s broader strategy to enhance oversight of global businesses. Last week, the government also required social media companies to set up physical offices in the country. These initiatives aim to make international firms more directly accountable to Kenyan authorities, simplifying enforcement and monitoring.
The requirement for physical offices presents significant hurdles for crypto companies, many of which operate remotely and rely on decentralized collaboration. While some foreign firms, such as Luno, claim to have physical offices in other African countries like Nigeria, such claims often lack verification, highlighting the industry's tendency to avoid establishing a local footprint.
For firms prioritizing the Kenyan market, compliance may prove worthwhile. However, others may view these demands as excessive, especially since similar jurisdictions in Africa have lighter regulatory burdens.
Kenya's stricter regulatory stance could serve as a model for other African nations. By demanding physical offices, the government seeks to bring offshore crypto companies into the formal economy, providing avenues for oversight and potential taxation. This approach aligns with a broader trend across Africa, where governments are balancing innovation with consumer protection.
Kenya has faced criticism for its delayed regulation of the crypto sector. The lag prompted Kotanipay, a homegrown crypto exchange, to secure its first license in South Africa rather than Kenya. However, the revised bill signals that Kenya is now accelerating efforts to regulate the space and bring it under formal oversight.
Kenya's regulatory push may also stem from financial incentives. By integrating crypto firms into its formal economy, the government positions itself to tax their operations more effectively. This strategy, however, comes with risks: overly stringent requirements could deter companies from entering the Kenyan market altogether.
Across Africa, crypto is shedding its "fringe technology" label. Countries are increasingly recognizing its potential for driving economic growth while taking steps to protect consumers. Whether Kenya’s approach of mandating physical offices will be effective remains uncertain, but the move highlights the continent’s evolving relationship with cryptocurrency—one that blends innovation with governance.
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