Earlier this week, there were reports that the Kenyan National Assembly’s Departmental Committee on Finance and National Planning…
Earlier this week, there were reports that the Kenyan National Assembly’s Departmental Committee on Finance and National Planning has directed the Blockchain Association of Kenya (BAK) to prepare the first draft of what could become a virtual asset service provider’s bill.
The development was received in many quarters with excitement as it seems to be a step in the right direction towards mainstream blockchain adoption in the East African country.
In connection with this update, Technext reached out to Allan Kakai, Director of Legal & Policy Affairs of the Blockchain Association of Kenya who sheds more light on the matter.
Background of the story
BAK took the Kenyan government to court in September to challenge the legality of the digital asset tax (DAT) provision in Kenya’s Finance Act, 2023. Recall that Kenya’s Financial Act 2023 became effective on September 1, along with the unpopular digital asset tax, which requires cryptocurrency exchanges to withhold 3% “of the transfer or exchange value of the digital asset.”
However, other developments in the country’s blockchain have industry like the ‘Worldcoin craze’ and the recent adoption of a synthesis paper relating to digital assets during the recent G20 summit in Morocco, have made the Committee to ask BAK to develop a draft bill to regulate crypto assets.
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Last Tuesday, BAK appeared before the National Assembly Committee on Finance and National Planning. According to the association’s leadership, they got a call from parliament saying they were interested in learning and exploring what digital asset space has to offer.
Representatives from BAK, Binance, Yellow Card, Kotani Pay, and the Law Society of Kenya attended the workshop and the agenda of the discussion was to develop a collaborative approach on how Blockchain Association of Kenya can work with the national government in developing favorable policies around digital assets.
The development is a validation
Allan Kakai, BAK Director of Legal and Policy Affairs said the association protested the Finance Bill 2023 proposal on Digital Asset Tax but authorities ignored pleas and passed it on Sept 1. However, the Revenue authority (KRA) has been unable to figure out how to implement the tax to date.
Also, the advent of Worldcoin propelled the launch of a parliamentary committee which led to recommendations to consult relevant stakeholders to develop a comprehensive oversight framework and policies on virtual assets and virtual assets service providers in Kenya.
“This led to the consensus that; given that we are the experts, we are best placed to draft this bill in a manner that will not stifle innovation. That gave us the greenlight to go ahead.”
In Kakai’s view, this development has given BAK the validation it needs to take lead on crypto policy. Also, he says this is a great precedent set for emerging technologies.
“As innovators, our biggest woe with regulation was that regulation stifles innovation or that tech regulations are made by people who do not understand the tech. For the first time, the tools have been handed down to us to be in control of both the tech and the regulations. This is very historic achievement.”
In a bid to strike a balance between adhering to the principle of decentralization as well as the protection of consumers, Allan Kakai told Technext that BAK will take inspiration from the remarkable success of Switzerland.
“The nation’s progressive regulatory approach has transformed Crypto Valley into a worldwide center for blockchain innovation. This thriving ecosystem boasts an impressive valuation of more than $611.8 billion and is home to fourteen Unicorn companies. this will help us build an environment where one can launch a bitcoin ETF, a T-Bills tokenisation project like Backed Finance’s bIBO1, a real estate tokenisation project etc.” Allan Kakai, BAK.
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Additionally, the BAK intends to explore regulations that will advance use cases and innovation whether it is centralised or decentralised.
“Anyone should be able to come launch and operate.”
Lastly, he told us that the general public should expect the final draft of the framework two months from now.