Lobby welcomes feedback on draft bill to regulate cryptocurrency

There is currently no clear recourse for addressing cryptocurrency-related fraud in Kenya. [iStockphoto]

The Blockchain Association of Kenya (BAK), the country's primary digital asset industry lobby group, has extended the feedback period for its community-led draft Virtual Asset Service Provider (VASP) bill.

The VASP Bill is the result of a mandate given to the association in November 2023 by the National Assembly's Finance and National Planning Committee. The BAK was tasked with drafting a framework to govern the cryptocurrency industry due to the absence of a framework, which has led to an increase in dubious cryptocurrency scams defrauding Kenyans of millions.

The VASP Bill was originally scheduled to be handed over to the National Assembly committee on February 14, 2023. However, due to the growing interest from new stakeholders, including government agencies and other parties affected by elements of the bill, the association decided, in consultation with its members, to extend the feedback period.

The association recently held a stakeholder breakfast where the Executive Board announced the extension of the feedback period to a later date. All stakeholders are invited to review and provide input on the bill.

If passed, the bill would affect a wide range of stakeholders, whether they are directly involved in digital assets or not. Therefore, the extended feedback period aims to gather comments from all stakeholders affected by elements of the Virtual Asset Service Providers bill, either directly or indirectly.

Speaking at the breakfast meeting, the board chairman Michael Kimani said the Virtual Asset Service Provider bill is a significant milestone towards curbing the rampant cryptocurrency-related scams that continue to defraud Kenyans of millions due to the absence of frameworks to protect the public.

Last week, the Directorate of Criminal Investigations (DCI) cautioned Kenyans about the growing number of scammers using cryptocurrency to steal from them.

"The DCI has noticed with concern the increase in reports of Kenyans losing their hard-earned money to scammers. Many are being lured to join online cryptocurrency investment platforms and end up losing their investments to fraudsters," the DCI stated.

It is for this reason, among others, that the association was tasked with drafting a bill that outlines consumer protection guidelines and a licensing framework to ensure that Kenyans are as protected as possible.

Since 2015, when the Central Bank of Kenya issued a notice warning banks not to engage with cryptocurrency companies, much of the cryptocurrency activity has gone underground, operating without regulations. This makes it difficult for government agencies and authorities to deal with the issue. Furthermore, legitimate companies that want to establish formal businesses are unable to operate in the country.

As a result, there is currently no clear recourse for addressing cryptocurrency-related fraud and no established business to serve consumers genuinely interested in digital assets.