The International Monetary Fund (IMF) has advised Kenya to prioritise creating a more predictable regulatory framework for its cryptocurrency sector. The IMF also recommended aligning Kenya's crypto guidelines with global standards. Officials from Kenya's Capital Markets Authority (CMA) had sought the IMF's input on challenges related to the future regulatory scope of the crypto industry. In response, representatives from the IMF's Monetary and Capital Markets Department (MCM) and Legal Department (LEG) visited Nairobi last year to assess the situation.
The IMF released a detailed, 43-page Technical Assistance Report for Kenya on January 8. The report outlines key areas for enhancing safety and regulation in the country's crypto sector.
IMF's Observations and Directions for Crypto to Kenya
The report highlights that Kenya currently lacks a clear regulatory framework to oversee crypto-related activities. This absence of rules, the IMF observed, has allowed cryptocurrencies to be used for unlawful purposes.
To address this, Kenya has been advised to study the Financial Stability Board's Global Regulatory Framework for crypto and review the IOSCO Policy Recommendations for digital asset markets, among other international guidelines. The broader aim should be to implement robust anti-money laundering laws and counter-terror financing measures to prevent misuse of cryptocurrencies.
In February 2024, the IMF conducted an analysis of Kenya's crypto activities and legal framework. During this period, IMF officials engaged with Kenyan authorities to discuss essential regulatory and legal principles needed to manage the growing crypto industry effectively.
The report urged Kenya to achieve consensus on the size, structure, and risks of its crypto market—areas the IMF identified as currently underdeveloped. Establishing clear records, it emphasized, would enable the creation of a well-informed and effective policy framework.
Kenya's Relation with Crypto
The IMF report clearly states that under Kenya's current legal framework, engaging in crypto activities like investing, trading, and holding are not illegal or banned.
Crypto incomes are taxed in Kenya under the Finance Act of 2023, that brought a three percent tax on the transfer or exchange of digital assets. Called the Digital Assets Tax (DAT), the law applies to crypto traders and exchanges. In November 2024, the Kenya Revenue Authority (KRA) disclosed that it collected 10 billion (roughly $77.3 million or Rs. 653 crore) from VASPs in FY 2023-24.
As per a 2022 UN report, Kenya has the largest share of crypto users in Africa. In 2022, it had over four million crypto owners.
The IMF has recommended that Kenya develop comprehensive crypto regulations to protect its expanding crypto community from scams, exploitation, and financial losses.
