Kenya has confirmed plans to regulate digital currencies amid sustained embrace by the public.
The Government of Kenya will take a major leap in digital finance and crypto. A local news media recently reported that John Mbadi, Kenya’s Treasury Cabinet Secretary, announced that crypto assets will soon be legalized in the country.
This development marks a major shift from the country’s previous stance, which had banned digital assets. This change comes after the use of cryptocurrencies continued to grow, despite the ban, in what became a thriving underground market.
Recognizing the sector’s growing importance, the government has reassessed its position. It is now planning to embrace cryptocurrency in a regulated manner.
Why Legalizing Cryptocurrencies Matters
The use of digital assets in Kenya has remained strong despite the government’s efforts to control it. Many Kenyans have relied on virtual currencies for cross-border transactions, savings, and investment.
This comes especially in response to inflation and limited access to traditional banking services. John Mbadi, in his announcement, acknowledged that Kenya’s financial sector has a long history of innovation.
He cited M-Pesa, the mobile money service launched by Safaricom in 2007, as a prime example. The success of M-Pesa has positioned Kenya as a leader in mobile finance. The government seeks to continue this innovative spirit by fostering a legal environment for cryptocurrencies while managing risks.
Mbadi emphasized that the government’s aim is not to stifle innovation or impede the growth of the crypto sector. Instead, the plan is to create a balanced and fair market where digital currencies can thrive under a clear regulatory framework.
The authorities aim to create a favorable regulatory framework in the country. This crypto policy would allow Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs) in Kenya to operate safely without stifling the sector.
The new policy will prioritize consumer protection, anti-money laundering strategies, and governance while encouraging innovation. As reported by Coinspeaker, Kenya plans to align crypto regulations with global standards as recommended by the International Monetary Fund (IMF).
However, the regulatory policies will be tailored to meet the local’s needs. This move positions Kenya alongside global trends in crypto regulation. Nations like Morocco, the United States, the United Kingdom, and Russia have already moved in this direction.
Navigating the Risks of Digital Currency
Despite the positive outlook, the government is not blind to the challenges of the cryptocurrency space. Risks like fraud, market volatility, and the potential for digital currencies to be used in illegal activities are major concerns. These include issues like money laundering and terrorism financing.
Mbadi acknowledged that the government is aware of the need for strong regulatory measures to manage these risks. The crypto market is highly volatile, as seen with the rise and fall of major exchanges like FTX. This has shown how fragile the sector can be.
However, the Kenyan government is determined to navigate these challenges with caution. The government plans to create a secure environment where innovation can thrive without compromising financial stability.
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