Kenyan President William Ruto announced a major policy shift in the country’s approach to cryptocurrency on May 3, revealing that his government has appointed U.S.-based Bitcoin mining company Marathon Digital as its consultant.
The move signals a departure from the Central Bank of Kenya (CBK) and other government entities’ previously defiant stance on cryptocurrencies.
Marathon Digital to Collaborate with the Kenyan Government
The announcement was made during the AMCHAM Business Summit, where notable figures such as U.S. Secretary of Commerce Gina Raimondo and Kenya Investment and Trade Cabinet Secretary Rebecca Miano were present.
President Ruto explained that Marathon Digital will partner with the National Treasury and the Energy Ministry to address the energy requirements associated with cryptocurrency mining.
“Marathon Digital has been ushered to consult with the Treasury on the cryptocurrency regime and ministry of energy to discuss the energy needs in connection with the cryptocurrency mining,” stated President Ruto during the meeting with American investors.
Ruto’s decision departs from the previous cautious stance on crypto taken by institutions like the CBK under former governor Patrick Njoroge. Njoroge had strongly warned against crypto involvement, suggesting that considering Bitcoin as a reserve asset would be absurd. He even stated that he should be imprisoned if such a proposal were entertained.
Following Njoroge’s tenure, Kenyan authorities have shown a willingness to explore regulation of cryptocurrencies rather than outright prohibition. Collaborative efforts with organizations like the Kenyan Blockchain Association have been initiated to draft regulatory frameworks. The current government has also appointed a working group to develop a comprehensive regulatory and monitoring framework for virtual asset service providers.
Kenya Takes Strides Towards Cryptocurrency Regulation
Kenya is initiating efforts toward crypto regulation, with the government forming a multi-agency team that includes the central bank.#crypto #cryptoregulationhttps://t.co/RneVliYODw
— Cryptonews.com (@cryptonews) April 23, 2024
Kenya’s crypto adoption momentum culminated in December 2023 when the Kenyan National Assembly’s committee approved the Capital Markets Bill. If passed into law, this bill would introduce taxation on cryptocurrency exchanges and wallets, mirroring the taxation framework applied to traditional banking transactions.
On April 23, NTV Kenya reported establishing a multi-agency working group tasked with developing rules and oversight for crypto, also known as virtual assets, and the entities dealing with them, such as Virtual Asset Service Providers.
Kenyan National Treasury Cabinet Secretary Prof. Njuguna Ndung’u disclosed the formation of this group to the National Assembly. He cited concerns raised by regulators regarding unlicensed virtual asset products and the findings of a Central Bank risk assessment. This assessment highlighted the risks of money laundering and terrorist financing associated with virtual assets.
Kenya’s 2022 anti-money laundering report further highlighted the need for regulatory measures, identifying virtual assets and virtual asset service providers as areas requiring attention. Additionally, Kenyan authorities uncovered suspicious M-Pesa withdrawals totaling at least $20 million in 2023, linked to the now-suspended iris-scanning project Worldcoin.
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