Kenya Moves to Regulate Crypto Trading Amidst Grey List Concerns
Kenya is reportedly working on implementing regulatory guidelines to oversee the trading of cryptocurrencies in the country, amidst grey list concerns.
This initiative aligns with Kenya’s strategy to bolster its financial system ahead of an evaluation by the Financial Action Task Force (FATF), an international agency that focuses on preventing money laundering and terrorism financing.
In line with this, a technical working group has been set up to advise the country’s Treasury office on cryptocurrency matters. The group is currently crafting the initial regulations, which will subsequently be presented to the Cabinet for approval.
Speaking on this, Financial Reporting Centre (FRC) Director-General, Saitoti Maika said,
“Right now, there is a sectoral working group that is working on developing a policy document to guide on developing a legal framework which will prescribe what needs to be done and who will be the regulator for digital assets providers. Probably, we may end up with a stand-alone regulator for virtual assets. We can’t bury our heads in the sand. The more we fail to regulate, the more we risk being punished.”
Implementing measures like regulating cryptocurrencies will aid Kenya in enhancing the integrity of its financial system and mitigating the likelihood of being placed on the FATF (Financial Action Task Force) grey list – a category comprising nations subject to heightened scrutiny regarding risks such as money laundering and terrorism financing.
FATF’s grey list currently includes countries like South Sudan, Tanzania, Uganda, and Sudan.
According to reports, the East African country lacks regulation for trading in cryptocurrencies despite being ranked among top dealers in peer-to-peer cryptocurrency platforms.
The FATF had identified deficiencies in Kenya’s anti-money laundering, counter-terrorist, and proliferation financing (AML/CFT) systems after an assessment conducted by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) in 2022. The country was then given a 12-month timeline to address these issues, with October 2023 marking this deadline.
In light of this, the FATF will evaluate Kenya’s progress in a meeting this week. If any shortcomings are detected, the country could potentially be placed on the FATF’s grey list.
