The fears that Kenya’s lack of a regulatory framework for overseeing the crypto industry has prompted the government to establish a working group tasked with drafting crypto regulations. Authorities in the East African nation are confident that the approved regulations will designate a sole regulatory body to oversee the cryptocurrency industry.
Lack of Regulation Threatens Kenyan Financial System
Concerns that the Financial Action Task Force (FATF) may place Kenya on its grey list have led the government to establish a working group responsible for drafting cryptocurrency regulations. A report in Business Daily suggests that this working group is expected to present its draft to the Kenyan Cabinet upon completion.
According to the report, the East African nation anticipates that the approved regulations will designate the regulatory authority overseeing the cryptocurrency industry. Saitoti Maika, the Director-General of the Financial Reporting Centre (FRC), stated that once the government approves the draft, stakeholders in the Kenyan crypto industry will become aware of the steps they need to take.
Emphasizing the need to regulate the crypto industry, Maika said:
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.
FATF Grey List
Like many of its African counterparts, Kenya has shown a reluctance to enact crypto-specific regulations, despite boasting one of the continent’s most robust crypto markets. This state of affairs has increased the prospects of Kenya joining four East African Community (EAC) member states on the FATF’s grey list.
However, the establishment of a regulatory framework to oversee the nation’s digital asset market could empower Kenyan authorities to penalize those who launder money through crypto assets, such as bitcoin (BTC). Furthermore, such a regulatory framework would provide authorities with insights into the flow of funds from the crypto space to Kenya’s financial system.
