Kenyan lawmakers recently tasked the Blockchain Association of Kenya (BAK) with drafting what could become a bill to regulate the crypto and digital asset economy of the East African Nation. This comes after the lobby group failed to win its lawsuit against the same government in April. The lawsuit opposed the newly-enforced digital asset tax that withholds 3% “of the transfer or exchange value” of digital assets. BAK, which has until January 2024 to turn in its draft, is now seeking input from all blockchain stakeholders. “We need all the help we can get. Together we can build the best regulatory policies for crypto in the world,” BAK’s legal and policy director, Allan Kakai, said in a NODO interview.

BAK’s ride with Kenyan lawmakers is quite storied. The group has long advocated for industry stakeholders' inclusiveness in law formation processes, maintaining that an existing knowledge gap has made regulation problematic for authorities. “The main factor that precipitated this collaboration was the lack of capacity in government. For a long time, the government has deliberately been avoiding the fact that they do not understand [blockchain] technology enough to regulate it. But things are beginning to change.” Kakai said.

To prepare this draft, the BAK is banking on the collective expertise of its members and networks. The association boasts high-level stakeholders in policy, blockchain entrepreneurship, and compliance, NODO learned. To prepare its draft, BAK will also engage public institutions such as Kenya’s Central Bank, the Kenyan Revenue Authority (KRA), and the Capital Markets Authority. When asked how BAK will thoroughly engage all necessary stakeholders within its limited time frame, Kakai said: “We have members that are connected to these bodies; we will make it work.”

“We Need Intellectual Resources”

Kakai stressed BAK’s need for what he termed “intellectual resources” in the draft formation process. Stakeholders in tech policy and blockchain organisations from across the world are welcome to participate in building the draft, he said. “Small startups, multinationals, and investors are all welcome too. We need as many opinions and suggestions as possible.”

The first of its kind in Africa, this move by lawmakers to allow a lobby group to draft what could turn out as a national bill may signify changing regulatory behaviour on the continent. Africa is well known to be crypto-averse, having only only five out of 54 countries where crypto is legal. In Nigeria, where crypto remains banned despite a celebrated national blockchain policy, bodies such as the Stakeholders In Blockchain Association of Nigeria (SIBAN) are now reporting stronger collaborative relations with the government. SIBAN’s president, Obinna Iwuno, told NODO that such collaborations will be marked by rapid growth and adoption of blockchain on the continent.

This year, the European Union made history with its adoption of the Markets in Crypto Assets (MiCA) legislation, a sweeping regulatory framework for digital assets. This forward-looking regulation has not only bolstered the EU's position in the global market but also led to a substantial increase in venture capital investments across EU nations throughout 2023. Kakai believes Kenya can witness a similar surge of resources if it gets its regulations right.

In the near future, BAK is preparing to take on a watchdog role, focused on eliminating bad actors in the industry and ensuring the protection of Kenyan consumers, said Kakai. The organisation's plans involve the creation of a framework that encourages various financial entities, including banks, telecom companies, and mobile money service providers, to operate in the digital asset economy