Key Points:

• Kenya is drafting legislation aimed at legalizing cryptocurrencies.
• The intent is to leverage potential benefits while combating risks such as fraud and money laundering.

Kenya's Treasury Cabinet Secretary John Mbadi remarked that the nation is working on laws to regulate cryptocurrencies, indicating a notable change from previous government stances that were largely negative towards the crypto space.

"The emergence and growth of Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs) have led to innovations in our financial systems, presenting both opportunities and challenges," Mbadi stated, referencing remarks made to a local news source, The Standard.

Mbadi emphasized the necessity for a regulatory framework that balances the advantages of the crypto industry with the potential risks including money laundering and terrorism financing.

"The Government of Kenya is committed to establishing a legal framework to take advantage of opportunities provided by VAs and VASPs, while also managing underlying risks," he added.

In December, Kenya released a draft policy on virtual assets that aims to promote a competitive market for crypto activities and enhance financial literacy. Historically, the nation has exhibited caution regarding cryptocurrency usage, as evidenced by a public notice from the central bank in 2015 that declared cryptocurrencies were not considered legal tender in the country.

Following growing interest and ownership of cryptocurrencies in Kenya, legislators began discussing potential laws for taxation in 2022, reflecting a significant shift in policy and perspective towards the industry.