Cryptocurrencies have been around for over a decade and are growing in popularity worldwide. In Kenya, cryptocurrencies are still fairly new, but the market is rapidly expanding, with new crypto platforms like Swerri popping up.
More and more people realize the power and potential of digital currencies every day, meaning that Kenyans are investing heavily in the crypto space in hopes of earning big profits.
One major concern about most potential Kenyan crypto investors is the current sanctions from regulatory authorities. Learn more about the current cryptocurrency regulations in Kenya below.
Previous CBK’s Stance on Digital Currency
In 2015, the Central Bank of Kenya (CBK), through a press release in 2015, stated its stance on the use of cryptocurrency in Kenya.
The press release stated that cryptocurrency is an unregulated digital currency not issued by the CBK or GoK. Moreover, it revealed that Bitcoin and other cryptocurrencies were not legal tenders in Kenya.
In addition, CBK revealed that no entities were licensed to offer money remittance products and services in Kenya with cryptocurrency. Furthermore, it issued a warning against Kenyan citizens dealing with cryptocurrency at their peril.
Also, it issued the same notice to financial institutions about dealing with digital currencies or making transactions with institutions.
Recent CBK’s Stance on Digital Currency
After seven years after the previous press release, there have been many changes in the crypto market in Kenya; that is, the CBK is slowly accepting the growth trajectory shown.
Therefore, CBK responded with an amendment to the Kenya Capital Markets that requires owners or dealers with cryptocurrency to provide the country’s Capital Markets Authority with information regarding their activities for tax purposes. This marks the first time Kenya extended financial regulations about cryptocurrency.
Under the Capital Market Amendment Bill, Kenyans must pay capital gains to the Kenya Revenue Authority when they buy or sell digital currencies.
In addition, the Amendment states that cryptocurrencies held for less than a year will fall subject to income tax. After six months, these cryptocurrencies will fall under capital gains tax.
What Does the Amendment Bill Means for Kenyans?
The Amendment bill classifies digital currencies as securities. Thus, it requires licensing individual crypto traders and creating a centralized electronic ledger of transactions in digital currencies in Kenya.
This move comes with consumer protection measures, such as the creation of a fund to protect investors from any financial loss that comes from the failure of a licensed dealer or broker.
Final Takeaway
It is clear that the amendment bill is here to stay and will significantly contribute towards augmenting the already progressive approach of the country to cryptocurrencies. Investing in Kenya might be an opportunity worth exploring if you are in the cryptocurrency industry.
The country offers a unique case of how countries deal with cryptocurrencies and their potential for increasing their digital economy.
