Kenya is considering implementing a new policy that would require cryptocurrency providers to establish local offices in order to enhance regulatory oversight within the country’s fast-growing virtual asset industry. According to a report by Bloomberg, the proposed law, which is currently in draft form on the National Treasury’s website, aims to tighten regulations on crypto businesses operating in Kenya.

The draft law would mandate that crypto businesses open local offices, with the intention of addressing issues such as consumer protection, data privacy, and cybersecurity. The policy would specifically target businesses dealing with assets that can be traded, transferred, or used for payments outside of a closed system. This move comes as Kenya seeks to close regulatory gaps in the absence of a legal framework for virtual assets and service providers.

Crypto adoption has been on the rise in Kenya, with the country ranking 28th out of 155 countries in Chainalysis’ Global Cryptocurrency Adoption Index. Despite the growing popularity of cryptocurrencies, Kenya currently lacks clear regulations governing the sector. In 2023, the government introduced a 3% tax on crypto transactions, but further regulatory measures are needed to ensure proper oversight.

If the draft law is passed, crypto businesses operating in Kenya will be required to establish a local presence, providing the government with a better means of monitoring their activities. The draft law is currently open for public input, although a timeline for its implementation remains unclear.

Overall, the proposed policy reflects Kenya’s efforts to keep pace with the evolving landscape of virtual assets and ensure that appropriate regulatory measures are in place to protect consumers and safeguard against potential risks associated with cryptocurrencies.