After being approved by the National Assembly Committee, Kenya’s Capital Markets (Amendment) Bill will be presented to the lower chamber of the parliament.
National Assembly Committee's Endorsement
The National Assembly’s Finance and National Planning Committee in Kenya has given its nod to the Capital Markets (Amendment) Bill, 2023, aimed at regulating and taxing the burgeoning digital currency market in the country. Sponsored by Mosop MP Abraham Kirwa, the bill has now moved one step closer to becoming law.
According to a local report, Committee Chairman Kimani Kuria emphasized the significance of the bill in safeguarding the nation against illicit activities, saying,
"This is a very critical law that will guard our country against proceeds of crime and terrorism financing. Cryptocurrencies are already being traded by millions of Kenyans yet we have no law to govern it. We approve this Bill for publication."
With committee approval secured, the bill is set to progress to the reading stage in the National Assembly, the lower chamber of the Parliament of Kenya.
Proposed Amendments and Taxation Models
The proposed legislation intends to increase oversight of an industry that operates with minimal regulation. To accomplish this, it introduces an amendment to the Capital Markets Act, Cap 485, to classify digital currencies as securities. It also proposes unique taxation models, including taxing crypto exchanges, digital wallets, and crypto transactions.
The amendment requires Kenyan crypto traders to pay capital gains taxes to the Kenya Revenue Authority (KRA) when their crypto assets earn profits on market value during a sale or transactional use. Furthermore, traders involved in digital currency transactions would need to report all details of their digital currency trading to the Capital Markets Authority (CMA), covering information like virtual currency amounts held, types of currencies transacted, and dates of acquisition and sale.
Kenya’s Proactive Regulatory Stance
Kenya's move to regulate cryptocurrencies aligns with a proactive stance amid global market volatility. A 2022 United Nations report highlighted Kenya's leading position in cryptocurrency ownership across Africa, surpassing more developed economies like the United States.
Additionally, the legislation targets countering financial crimes associated with the anonymous nature of crypto transactions. It aims to protect traders, ensuring a stable and secure environment for digital currency transactions.
Notably, the bill also considers the environmental impact of digital currency generation and crypto mining, showcasing a comprehensive approach to this emerging financial landscape.
Potential Implications and Regional Leadership
The bill's progress reflects a growing acknowledgment of the significance of cryptocurrencies in Kenya's economy. If passed, the legislation is poised to bring clarity and security to traders and investors. Moreover, it positions Kenya as a front-runner in Africa's adoption of digital currencies, following the lead of countries like South Africa and Nigeria. As the bill advances through the legislative process, its impact on the crypto landscape and the broader economy will be closely watched.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
