Kenya plans to legalize crypto, says Finance Minister John Mbadi

Key Takeaways

Kenya is going to legalize cryptocurrencies, as announced by the Finance Cabinet Secretary, John Mbadi.
This proposed legislation aims to create a regulated environment for cryptocurrencies and Virtual Asset Service Providers, while reducing risks including money laundering and fraud.

Kenya plans to legalize crypto assets, moving away from its previous ban as the country recognizes their widespread use and potential benefits, Kenya's Finance Cabinet Secretary said, John Mbadi, in a statement on January 10, first. reported by The Standard.

“Kenya's financial sector is a beacon of innovation and growth in Africa,” said Mbadi. “The emergence and growth of Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs) have created new innovations in the system local and international finance with dynamic opportunities and challenges.”

The draft policy aims to “establish a fair, competitive and sustainable market for VAs and VASPs” while addressing risks including money laundering, terrorist financing, and fraud through a comprehensive regulatory framework , the report noted.

The proposed legal framework seeks to harness the benefits of digital financial innovation, foster a competitive market for crypto assets and increase financial inclusion.

Mbadi said Kenya has “consistently pushed the boundaries of financial inclusion through technological advances.” This has been proven throughout the country's history of financial innovation, especially with the launch of Safaricom's M-Pesa mobile money service in 2007, he said.

“This dynamic sector has fueled economic growth and empowered individuals” he noted, adding that interest in virtual assets has increased, with users on the attraction to speed, cost efficiency and cross-border capabilities.

Legalization of crypto assets is also part of the strategy to position Kenya as a key player in the global digital financial ecosystem, according to Mbadi.

Kenya currently lacks clear regulations for crypto trading and use despite ranking third in sub-Saharan Africa and 28th globally in crypto adoption, according to Chainalysis' 2024 report. The Central Bank of Kenya previously warned against crypto risks, citing concerns about the lack of legal tender status, anonymity, instability, and potential criminal activity.

The latest development follows technical support report proposes improved crypto regulations for Kenya, which the International Monetary Fund (IMF) issued on Wednesday.

The IMF advised the government to focus on compliance with international standards, addressing issues such as consumer protection and money-related risks, anti-money laundering and combating terrorist financing.