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{
"id": 1583321,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1583321/?format=api",
"text_counter": 279,
"type": "speech",
"speaker_name": "Molo, UDA",
"speaker_title": "Hon. Kuria Kimani",
"speaker": null,
"content": "with specific digital ecosystems under cross-border financial systems, depending on their structure and application. The question begs: should we regulate these assets? Kenya has witnessed a remarkable rise in cryptocurrency adoption, with over 10 million citizens now holding one form of digital asset or another. There is significant engagement in peer-to-peer cryptocurrency trading, which has earned Kenya a top position in global rankings for trading volume and overall cryptocurrency activity, according to the China Analysis Global Crypto Adoption Index of 2023. This growth demonstrates substantial interest in digital assets, especially among young Kenyans, and highlights the sector’s economic potential. Over the years, our traditional financial regulators, particularly the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA), have adopted a cautious approach towards virtual assets. For instance, in 2015 and 2022, the CBK issued cautionary notices to financial institutions, warning against engaging with cryptocurrencies and stating that they are not recognised as legal tender. However, we now realise that burying our heads in the sand is no longer tenable. In this regard, the National Treasury has brought forward the Bill before us, sponsored by the Leader of the Majority Party. When I was elected to this honourable House during my first Term in 2017, I raised a question in 2018 to the then Governor of the Central Bank of Kenya. I asked what measures the CBK and the National Treasury were taking to prepare for the emergence of bitcoin, blockchain technology, and cryptocurrency. The Governor responded that cryptocurrency and blockchain technology were a passing cloud, a fad that would fade away. Today, it is evident that these technologies are no longer a fad. Digital assets, including bitcoin, blockchain, Ethereum, stablecoins and others, are here to stay. The scope of this Bill is designed to regulate all individuals and entities engaging in virtual asset services within or from Kenya. It applies to companies incorporated under Kenyan law, or foreign companies recognised under the Companies Act, and licensed to provide virtual assets as defined in the First Schedule of the Bill. However, the Bill deliberately, excludes certain types of digital representations to avoid over-regulation. Exempted items excluded by the relevant authority include digital representations of value or rights that operates within a closed ecosystem such as in-game currencies that cannot be exchanged for fiat money or traded outside the issuer’s platform, central bank-issued digital currencies, certain non-fungible tokens not used for payment or investment purposes, and others. The Bill carefully, defines its scope to ensure that only virtual asset activities posing financial, consumer or systematic risks fall under regulatory oversight. At the same time, it seeks to preserve innovation and minimise unnecessary regulatory burdens. This approach is particularly important, considering past cases in Kenya where the lack of regulation led to consumer losses. For example, in 2023, thousands of Kenyans lost millions of shillings when the cryptocurrency platform Bitstream Circle collapsed. It had promised high returns and operated without any regulatory oversight, yet it was not licensed or monitored by any Kenyan authority. Such cases highlight the dangers of unregulated virtual assets services and demonstrates the need for a clear legal framework to safeguard public funds. Any person or entity seeking to provide virtual asset services must now apply for a licence from the relevant authority, which could be the Capital Markets Authority, the The electronic version of the Official Hansard Report is for informationpurposes only. A certified version of this Report can be obtained from the Hansard Editor."
}