According to recent statements by Treasury Cabinet Secretary John Mbadi, Kenya is drafting legislation aimed at legalizing cryptocurrencies. This move marks a notable shift from the government's prior warnings regarding the crypto sector. Mbadi highlighted the rapid growth and emergence of virtual assets and service providers, leading to financial system innovations with both opportunities and challenges. He emphasized the need for a regulatory framework to balance the benefits of the industry with the risks of money laundering, terrorism financing, and fraud.
The Kenyan government is committed to establishing a legal and regulatory framework to leverage the opportunities presented by virtual assets while mitigating associated risks. In December, a draft policy was launched focusing on virtual assets and service providers, aiming to create a stable and competitive market that fosters innovation and financial literacy.
Historically, Kenya has been cautious about the cryptocurrency industry, with the central bank issuing a warning in 2015 about the use of cryptocurrencies, stating they were not recognized as legal tender. However, by 2022, the country began considering legislation to tax cryptocurrencies as the industry grew, with approximately 8.5% of Kenyans owning cryptocurrencies, according to a United Nations report.