In a significant move to regulate digital assets, Kenya’s National Treasury has announced new requirements for reporting cryptocurrency transactions. This regulatory framework is part of Kenya’s wider initiative to enhance transparency and ensure compliance within the rapidly growing cryptocurrency market.

The Treasury’s announcement came amid growing concerns over tax evasion and financial crime associated with crypto transactions. The Kenya Revenue Authority (KRA), supported by the Financial Reporting Centre (FRC), is leading the regulatory charge. KRA Commissioner General Humphrey Wattanga emphasized the agency’s intention to monitor digital transactions closely, aiming to reduce tax leakage in an industry currently operating under minimal oversight.

In October 2023, Kenya’s Financial Reporting Centre, responsible for anti-money laundering and counter-terrorist financing, highlighted that Kenya risks financial consequences if the crypto sector remains unregulated. Saitoti Maika, Director General of the FRC, underscored the need to account for proceeds within Kenya’s financial system and stressed the importance of a regulatory approach that safeguards against potential threats posed by illicit transactions.

The new regulations come on the heels of Kenya’s parliamentary discussions around the proposed Virtual Asset Service Providers (VASP) bill, expected to formalize oversight mechanisms for exchanges and mandate compliance standards. The proposed measures will also enable KRA to collect taxes on digital assets, as authorized under Kenya’s Income Tax Act, ensuring that the 3% tax on digital transactions will be applied across the board.

While some crypto traders expressed concern about the tax’s impact on digital innovation, others see the regulations as a step toward securing the crypto sector and promoting broader market legitimacy. This framework reflects the National Treasury’s intent to balance responsible trading with economic innovation, aiming to bring Kenya’s fast-growing crypto industry in line with global financial standards.

The policy’s enactment is a turning point in Kenya’s financial landscape, marking one of the government’s first substantial efforts to structure the country’s burgeoning cryptocurrency market. As crypto usage expands across Kenya, the Treasury’s new regulations are positioned to strengthen Kenya’s financial integrity and position the nation as a potential regulatory leader in the African digital economy.