Kenyan President William Ruto announced a significant policy shift in the country’s approach to cryptocurrency on May 3, appointing U.S.-based Bitcoin mining company Marathon Digital as a consultant. This move marks a departure from the Central Bank of Kenya’s previous reluctance towards cryptocurrencies. President Ruto stated that Marathon Digital will work with the National Treasury and the Energy Ministry to address the energy needs associated with cryptocurrency mining. This decision contrasts with former governor Patrick Njoroge’s strong warnings against crypto involvement, signaling a more positive stance on digital assets.
Under the current government, Kenya is showing a willingness to explore cryptocurrency regulation rather than outright prohibition. Collaborative efforts with organizations like the Kenyan Blockchain Association are underway to draft regulatory frameworks. Additionally, a working group has been appointed to develop a comprehensive regulatory and monitoring framework for virtual asset service providers. The government’s efforts culminated in the approval of the Capital Markets Bill in December 2023, which, if passed into law, would introduce taxation on cryptocurrency exchanges and wallets, aligning with traditional banking transactions.
Kenya’s momentum towards crypto regulation is evident in the establishment of a multi-agency working group responsible for developing rules and oversight for virtual assets and entities dealing with them, such as Virtual Asset Service Providers. National Treasury Cabinet Secretary Prof. Njuguna Ndung’u disclosed the formation of this group, citing concerns raised by regulators regarding unlicensed virtual asset products and the risks of money laundering and terrorist financing. The 2022 anti-money laundering report in Kenya also emphasized the need for regulatory measures in the virtual assets sector, particularly in light of suspicious M-Pesa withdrawals linked to the suspended iris-scanning project Worldcoin in 2023.
The Kenyan government’s collaboration with Marathon Digital and other stakeholders signals a shift towards embracing and regulating cryptocurrencies rather than rejecting them outright. This strategic partnership underscores Kenya’s willingness to explore the potential benefits of digital assets while also addressing concerns related to money laundering and terrorism financing. As the country moves towards cryptocurrency regulation, the involvement of key players like Marathon Digital and the establishment of regulatory frameworks demonstrate Kenya’s commitment to fostering a conducive environment for the growth of the digital asset sector. This approach aligns with global trends towards cryptocurrency adoption and regulation, positioning Kenya as a proactive player in the evolving crypto landscape.
