In a significant development reflecting the evolving landscape of financial regulations in Kenya, the Kenyan Parliament has taken strides toward the regulation of cryptocurrencies. The parliamentary committee has given its approval for a bill aimed at expanding the definition of securities to encompass cryptocurrencies like Bitcoin and Ethereum, signaling a pivotal step in addressing the rapidly expanding crypto market in the country.

The proposed legislation, known as the Capital Markets (Amendment) Bill, 2023, has garnered attention for its comprehensive approach to regulating digital assets. Sponsored by Member of Parliament Abraham Kirwa of Mosop, the bill seeks to introduce crucial measures for governing the burgeoning crypto sphere in Kenya.

With the recent committee approval, the bill is poised for consideration in the Kenyan National Assembly, where lawmakers are expected to engage in debates and potentially introduce amendments before the final reading. Once passed through this stage, the bill will await the crucial assent from the Kenyan president, solidifying it as law.

Kimani Kuria, a Member of Parliament representing Molo and a key figure in the bill’s progression, emphasized the necessity of regulating the crypto landscape, highlighting its significance in safeguarding against illicit financial activities such as money laundering and terrorism financing.

“This legislation is pivotal in safeguarding our nation against the potential risks associated with cryptocurrencies. With millions of Kenyans engaging in crypto transactions, it is imperative to have a regulatory framework in place,” remarked Kuria.

One of the key components of the proposed bill is the imposition of taxes on cryptocurrency exchanges and digital wallets. Additionally, it introduces a capital gains tax on individuals realizing profits from the sale of their crypto assets. Abraham Kirwa, the bill’s sponsor, stressed that these measures aim to protect Kenyan citizens from the inherent risks prevalent in the crypto sphere.

Kirwa also criticized the Central Bank of Kenya for what he deemed a lackadaisical approach toward regulating cryptocurrencies, citing a need for more comprehensive measures to safeguard users’ interests. The Central Bank, historically cautious about digital currencies, has witnessed a surge in Kenyan adoption despite its reservations.

The bill, if enacted into law, will require individuals holding cryptocurrencies to furnish detailed information to Kenya’s Capital Markets Authority. This mandate includes disclosing transaction proceeds, associated costs, and any gains or losses incurred during transactions, ensuring greater transparency and regulatory oversight in the crypto space.

Kenya’s growing prominence as a significant crypto market in Africa has been a catalyst for this legislative move, acknowledging the need to provide a structured framework for users and entities operating within the digital asset sphere.

The proposed regulations aim not only to address the growing popularity of cryptocurrencies but also to instill confidence in users by mitigating potential risks and ensuring compliance with established financial norms. By encompassing digital assets within the securities framework, Kenya seeks to strike a balance between fostering innovation and safeguarding against financial vulnerabilities.

As the Kenyan Parliament progresses toward a comprehensive regulatory framework for cryptocurrencies, the eyes of both crypto enthusiasts and regulatory authorities remain fixed on the outcome, anticipating a nuanced approach that accommodates innovation while fortifying financial security.