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IMF Urges Kenya to Update Crypto Laws
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The institution said that the East African nation must address rising scams. Also, aligns its framework with global standards to ensure financial stability.
The IMF emphasized the need for a clear and predictable regulatory environment to protect consumers. It also highlighted the importance of mitigating risks linked to Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT).
IMF Calls for Modern Crypto Laws in Kenya
On January 8, the IMF published a technical assistance report after Kenya’s Capital Markets Authority (CMA) sought guidance. The report revealed that Kenya’s current regulations are outdated, designed for traditional markets, and have “limited and no legally binding” authority over cryptocurrency. This regulatory gap has contributed to a surge in crypto scams and criminal activities.
The IMF’s consultations in Nairobi highlighted widespread uncertainty and a lack of consensus among lawmakers about how to handle cryptocurrency. To bridge these gaps, the IMF advised Kenya to adopt a regulatory framework that aligns with international standards while addressing its crypto market’s specific challenges and opportunities.
“The development of this framework should consider the unique challenges and opportunities within Kenya’s crypto market, ensuring it is robust, transparent, and capable of fostering innovation while protecting consumers and maintaining financial stability,” the IMF stated.
Recommendations for Kenya
The IMF outlined both short-term and long-term steps Kenya should take to overhaul its crypto regulations:
Short-Term Goals (6-12 months):
- Conduct an empirical analysis of the crypto market.
- Foster collaboration and education among regulatory authorities.
- Clarify the scope of existing regulations to cover crypto assets.
Medium- and Long-Term Goals (12-24+ months):
- Establish a legal and licensing framework for crypto businesses.
- Bolster supervisory resources to enforce regulations effectively.
- Align Kenya’s crypto framework with international standards such as the Bali Fintech Agenda, FATF Recommendations, and the Financial Stability Board (FSB) Global Regulatory Framework.
IMF Deputy Managing Director @NigelClarkeJa will visit Nairobi on December 8-10 as part of the IMF’s ongoing engagement with Kenya. During his visit, DMD Clarke will meet with President @WilliamsRuto and a range of stakeholders. pic.twitter.com/qI4Vqn8NrZ
— IMF Africa (@IMFAfrica) December 8, 2024
Strengthening Oversight
The IMF also recommended Kenya move beyond surveys and questionnaires to gain a clearer understanding of its crypto landscape. Authorities were urged to define crypto assets under financial laws and avoid conflicting terminology, such as “digital currency” versus “virtual asset.” Clear definitions would enhance legal consistency and reduce loopholes.
Disclaimer
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January 10, 2025 at 04:40AM
January 10, 2025 at 04:40AM
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