Kenyan President William Ruto made a significant policy shift on May 3 by appointing U.S.-based Bitcoin mining company Marathon Digital as the country’s consultant for cryptocurrency matters. This move signifies a departure from the Central Bank of Kenya’s previous stance on cryptocurrencies, with President Ruto choosing to collaborate with Marathon Digital to address energy requirements for cryptocurrency mining. This decision contrasts with the government’s prior cautious approach to cryptocurrencies under former governor Patrick Njoroge, who strongly warned against crypto involvement.
President Ruto’s decision showcases a shift towards exploring regulation of cryptocurrencies rather than outright prohibition, as seen through collaborative efforts with organizations like the Kenyan Blockchain Association to draft regulatory frameworks. The government has also established a working group to develop a comprehensive regulatory and monitoring framework for virtual asset service providers. The momentum towards cryptocurrency regulation in Kenya also led to the approval of the Capital Markets Bill by the Kenyan National Assembly’s committee in December 2023, which proposes taxation on cryptocurrency exchanges and wallets.
In April 2024, NTV Kenya reported the establishment of a multi-agency working group tasked with developing rules and oversight for crypto, also known as virtual assets, and entities dealing with them. Kenyan National Treasury Cabinet Secretary Prof. Njuguna Ndung’u disclosed the formation of this group, citing concerns raised by regulators regarding unlicensed virtual asset products and risks of money laundering and terrorist financing. The formation of this group was prompted by the findings of a Central Bank risk assessment and the 2022 anti-money laundering report in Kenya.
The Kenyan government’s efforts towards cryptocurrency regulation are part of a broader trend in the country to address the risks and challenges associated with virtual assets. The decision to collaborate with Marathon Digital and establish regulatory frameworks reflects a shift in policy towards a more proactive and engaging approach to cryptocurrencies. These initiatives aim to ensure that Kenya is equipped to handle the growing presence of virtual assets in the digital economy and mitigate potential risks such as money laundering and terrorist financing.
President Ruto’s announcement at the AMCHAM Business Summit highlighted the government’s commitment to exploring new opportunities in the cryptocurrency space and leveraging the expertise of companies like Marathon Digital to navigate the complexities of energy requirements for cryptocurrency mining. By appointing Marathon Digital as a consultant, the Kenyan government is signaling its readiness to embrace innovation and explore the benefits of cryptocurrencies while also ensuring that regulatory measures are in place to safeguard against illicit activities.
Overall, Kenya’s shift towards cryptocurrency regulation and collaboration with companies like Marathon Digital represents a significant step in embracing the future of digital finance and establishing a framework for the responsible use of cryptocurrencies in the country. Through these initiatives, Kenya is positioning itself as a leader in the adoption of virtual assets while also demonstrating a commitment to addressing regulatory challenges and ensuring the integrity of its financial system.
