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{
"id": 1583322,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1583322/?format=api",
"text_counter": 280,
"type": "speech",
"speaker_name": "Molo, UDA",
"speaker_title": "Hon. Kuria Kimani",
"speaker": null,
"content": "Central Bank of Kenya, or the proposed new body, the Virtual Assets Regulatory Authority. The Bill places strong emphasis on the prevention and management of conflicts of interest among licensed Virtual Asset Service Providers (VASPs). These providers must establish and maintain effective internal policies to identify, mitigate and manage potential or actual conflicts of interest. For instance, if a VASP acts as both a broker and a client, it must separate those roles clearly. Where such conflicts cannot be avoided, they must be reported to the relevant authority."
},
{
"id": 1583323,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1583323/?format=api",
"text_counter": 281,
"type": "speech",
"speaker_name": "Molo, UDA",
"speaker_title": "Hon. Kuria Kimani",
"speaker": null,
"content": "The Bill outlines enforcement measures for any contraventions of its provisions, including clearly defined fines set out in the schedule. It also provides an appeals mechanism. If a licence application is rejected, the Bill sets timelines for the regulator to respond, outlining the documents required and the reasons for approval or denial. This is intended to prevent the delays seen in other sectors, where regulators have taken years to issue licences even after laws have been passed. Additionally, the Bill allows the Cabinet Secretary to issue further regulations. Since this is a new entity, not everything can be captured in the principal law. The Cabinet Secretary will be required to issue such regulations within six months of the law coming into effect."
},
{
"id": 1583324,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1583324/?format=api",
"text_counter": 282,
"type": "speech",
"speaker_name": "Molo, UDA",
"speaker_title": "Hon. Kuria Kimani",
"speaker": null,
"content": "One of the key advantages of blockchain technology is its decentralised nature. Unlike traditional financial systems, which rely on central authorities, blockchain operates on a distributed ledger maintained by a network of nodes. This decentralisation reduces single points of failure and enhances the security and resilience of financial systems. For instance, Kraken, a global leader, has partnered with DeFi Development Corp to tokenise shares on the Solana Blockchain. This demonstrates the potential of decentralised finance to integrate traditional assets into blockchain ecosystems. I hope this Bill will help make this reality in Kenya. Another critical feature of blockchain is transparency. Every transaction is recorded on a public ledger that can be audited by anyone. This helps build trust among users and reduces fraud and corruption. Platforms such as Coinbase can tokenise Government securities and provide real-time visibility into their ownership and transfers, thereby improving accountability. One day, I hope we can use this technology to safeguard public assets. Issues such as the duplication of title deeds could be addressed through blockchain, where any attempt to change a title deed would be easily detected. Blockchain records are immutable; once a transaction is recorded, it cannot be altered or deleted. This feature is essential for maintaining the integrity of financial records and prevents tampering. We should consider amending our land registration and procurement systems to incorporate blockchain technology so as to reduce fraud and enhance transparency."
},
{
"id": 1583325,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1583325/?format=api",
"text_counter": 283,
"type": "speech",
"speaker_name": "Molo, UDA",
"speaker_title": "Hon. Kuria Kimani",
"speaker": null,
"content": "This legislation seeks to democratise access to investment opportunities through tokenised investment tools. By breaking down assets into smaller, more affordable units, tokenisation allows a broader range of investors to participate in markets that were previously inaccessible. For example, for you to own a parcel of land in Kenya, you need to own the entire piece of land. It will, therefore, be possible for Kenyans across the economy to own part of that property and gain profit from that interest for now. For you to buy a piece of land, you probably need to buy a 50 by 100,100 by 100, one acre, one hectare or whatever it is, but by using tokenisation, it is possible to have this land accessible to young people in this country through those small units and have them get a considerable return on investment. 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."
},
{
"id": 1583326,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1583326/?format=api",
"text_counter": 284,
"type": "speech",
"speaker_name": "Molo, UDA",
"speaker_title": "Hon. Kuria Kimani",
"speaker": null,
"content": "The efficiency of this blockchain is another compelling advantage that as a country, we should tap into. Traditional financial transactions often involve multiple intermediaries, leading to delays and increased costs. It will be important to remind ourselves how, for example, the Blockchain Technology and in particular, the Bitcoin, was launched. During the financial system breakdown in the United States of America, we had banks in the midst of competition to issue mortgages to almost every American. Consequently, what happened? The price of those houses, considering the force of demand and supply, fell lower than the mortgage amount that was mortgaged in particular institutions. Therefore, this led to the collapse of the entire financial system in the United States of America. This is what these young people who are accountants, financial analysts and computer scientists wonder. How can we preserve value for assets without necessarily having to use intermediaries? This technology that we are talking about - the digital asset - is now providing that space where you no longer need an intermediary to store value for your asset consequently, reducing the fraud that occurs in that space. This technology will support development of what we call smart contracts, which are self-executing contracts with the terms of the agreement directly written into a code. Smart contracts can automate various financial processes and reduce the need for manual intervention and minimise the risk of human error. As we style ourselves as a Silicon Valley, we need to enable this framework and this is our opportunity. One of the issues that we see in matters of litigation across the country, is in terms of contracts that have not been honoured. Using this technology, we can have smart contracts that get to mature and whatever is supposed to be executed, is executed through technology without having to have any human intervention. Therefore, this will even reduce the litigation that goes in our court systems for unhonoured contract. I do not want to belabour the point anymore but let me underscore that the potential for innovation in Blockchain Technology is vast and will create immense opportunities for our economy, including creation of jobs. As technology continues to evolve, new applications and use cases are emerging. For example, the integration of Blockchain with other technologies such as Artificial Intelligence (AI) and Internet of Things (IoT) are creating new opportunities for financial innovation, and as a nation we should not be left behind. This framework landscape for Blockchain and virtual assets is evolving. Governments and regulatory bodies are increasingly recognising the potential use of these technologies. In Africa, as I said, we will be the fourth nation to pass this law and I call upon this House to support the Bill and the amendments that this Committee is going to bring to the House. Hon. Temporary Speaker, Jamie Dimon, a Chief Executive Officer, said that the Blockchain is the financial challenge of our time. It is going to change the way our financial world operates. A few years ago, a few people sat and discussed the creation of M-Pesa. At the time, Vodafone said that it was impossible: “Everyone uses banks, relies on the banking system, and we cannot have money being transferred through mobile phones.” A few people in that room, the likes of Michael Joseph and others who improved on that technology said, “No, it is possible.” A few young Kenyans were tasked to create that platform and now, much more money is exchanged on M-Pesa than any other financial system in Kenya. Blockchain Technology, virtual assets, is the new M-Pesa. A lot of transactions globally are now not happening through the traditional banking systems, and they are not happening through 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."
},
{
"id": 1583327,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1583327/?format=api",
"text_counter": 285,
"type": "speech",
"speaker_name": "Molo, UDA",
"speaker_title": "Hon. Kuria Kimani",
"speaker": null,
"content": "mobile exchanges; they are happening through virtual assets. I hope and pray that this honourable House will make Kenya lead so that we attract Foreign Direct Investment (FDI) for institutions to come up and set up in Kenya and expand to the rest of Africa, making Kenya the Silicon Valley of virtual assets. Let us not be scared of new technologies. Let us also not be afraid of these new technologies. Let us embrace them, let us promote them, let us support them, and make sure that we are not left behind by the rest of the world. With those many remarks, I beg to move and request my senior, the Leader of the Majority Party, and the great Member for the great people of Kikuyu Constituency, to second. Thank you, Hon. Temporary Speaker."
},
{
"id": 1583328,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1583328/?format=api",
"text_counter": 286,
"type": "speech",
"speaker_name": "Hon. Peter Kaluma",
"speaker_title": "The Temporary Speaker",
"speaker": null,
"content": " Leader of the Majority Party."
},
{
"id": 1583329,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1583329/?format=api",
"text_counter": 287,
"type": "speech",
"speaker_name": "Kikuyu, UDA",
"speaker_title": "Hon. Kimani Ichung’wah",
"speaker": null,
"content": " Thank you, Hon. Temporary Speaker. I rise to second this Virtual Asset Service Providers Bill that has been ably moved by the Chairperson of the Departmental Committee on Finance and National Planning that considered this Bill. Hon. Temporary Speaker, as he has said, Kenya is indeed a beacon of innovation and growth in Africa in the sector of financial services. Indeed, as the Chairperson alluded, M- PESA is such one example of financial inclusion services in the financial services sector, where Kenya has not just become a beacon of innovation, but also become a focus point for the entire world. Even before America, the Silicon Valley, and India, and other countries moved into mobile money transfers, Kenya led the way. Therefore, we cannot afford to be left behind in the space of virtual asset. It is important that we have a legal framework that will form the basis of the regulatory work of the virtual assets themselves, the regulation of virtual assets systems, and also the service providers of virtual assets. Hon. Temporary Speaker, Kenya has witnessed increased adoption and use of virtual assets, particularly in payments and investments over the years and these assets present very good opportunities to promote digital finance, boost commerce, especially e-commerce, and even create a new class of digital jobs. Our young, innovative men and women in our universities and those graduating from our mid-level technical and technology colleges have an opportunity to explore the digital jobs that come with these virtual assets. Unfortunately, the benefits of these virtual assets have also been challenged by cyber security risks, data privacy risks, fraud, and scams in the country. The best case example is the World Coin episode about one or two years ago. I remember the hullaballoo that was there at the Kenyatta International Convention Centre (KICC) with World Coin and Bitcoin but those are the challenges that come with these virtual assets. There are also questions that touch on not just cyber security, but also data privacy, and you remember the challenges then with World Coin was on data privacy. The challenges that were there was where the data collected was being taken to, which included the scanning of people's eyes and a lot of private data. We have a lot of challenges with data privacy, cyber security risks, fraud, and what are outright scam where many Kenyans have been scammed in the pretext of buying Bitcoins; some that are just Ponzi games that are sponsored by innovative people in the fraud industry, because fraud is also a very huge industry. Many of those people, including some who are in our space, are involved in what has been christened 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."
},
{
"id": 1583330,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1583330/?format=api",
"text_counter": 288,
"type": "speech",
"speaker_name": "Kikuyu, UDA",
"speaker_title": "Hon. Kimani Ichung’wah",
"speaker": null,
"content": "the wash wash . The wash wash industry, you know, was a very big industry and has been a big industry and these people are now graduating from their wash wash business into the virtual assets industry, and scamming very many Kenyans, especially those who are after a quick shilling or a quick buck. It is, therefore, important that we have a legal and regulatory framework that relates to the use of virtual assets and related activities in the country so that we stem this fraud, the challenges on data privacy, fraud and cyber security risks. Hon. Temporary Speaker, in December 2015, the Central Bank of Kenya issued a public notice, cautioning the public against virtual currencies such as Bitcoin, citing the risks in operating in an un-regulated environment. The notice highlighted concerns around the lack of legal protections, potential misuse of money laundering and terrorism financing and the speculative nature of these assets due to their lack of any underlying value. Consequently, the CBK, through Banking Circular No.14 of 2015, prohibited all financial institutions from engaging in or facilitating virtual currency transactions. The lack of a regulatory and legal framework are challenges we have lived with that it took CBK, through a circular, to caution financial institutions from engaging in virtual assets. But the truth is, we cannot function in isolation from the rest of the world. Virtual assets are a reality. As the Chairman of the Committee said while moving the Bill, if M-Pesa was an innovation some years back, then virtual assets are innovations that we must live with. We should create a legal and regulatory framework to govern how financial institutions in our country deal with and transact in virtual assets. This is because virtual assets have no underlying value. It is not like a piece of land or a car for which a valuer can tell you their value. Speculative habits can quickly move the value of a virtual asset from a dollar to thousands of dollars with nothing underlying. Therefore, if there is no legal and regulatory framework on how financial institutions deal with these issues, then we will leave Kenyans exposed. That is why it has become imperative that we have a regulatory and legal framework as a country. It is against this backdrop that the National Treasury in January, 2025 published the National Policy on Virtual Assets and Virtual Asset Service Providers. The policy lays out a national vision for a secure, inclusive and innovative digital asset economy. It calls for a coordinated regulatory framework led by CBK, the CMA and the Competition Authority of Kenya (CAK). It is also grounded in a public-private collaboration, bearing in mind that many virtual assets are not traded by Government or their trade regulated by Government. It calls for a multi-pronged approach involving CMA, the Communications Authority of Kenya (CA) and CAK and to have a legal and regulatory framework to anchor the policy into law. That is what this Bill seeks to do. It seeks to implement the policy to bring clarity to operators, protect consumers and ensure credibility in Kenya’s digital finance ecosystem to stem the abuse that has been there. I do not want to go into all the details of the Bill, because the Chairman has clearly elaborated what is provided in it. Allow me to draw Members’ attention to Part II of the Bill, which designates CMA, CBK and any other public body approved by the Cabinet Secretary to license virtual assets service providers and regulate, supervise and monitor the promoters of virtual assets. The part also provides for a system of mandatory licensing of persons and businesses. This will ensure that we stem the culture that has been there. I have seen young people who have just finished college purporting to trade in virtual assets, but nobody 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."
},
{
"id": 1583331,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1583331/?format=api",
"text_counter": 289,
"type": "speech",
"speaker_name": "Kikuyu, UDA",
"speaker_title": "Hon. Kimani Ichung’wah",
"speaker": null,
"content": "regulates them. They also do online marketing of virtual assets. They are very tech-savvy and can rope in very many people within a short period and collect a lot of money, then within a short time the whole thing collapses and innocent Kenyans lose their money. Kenyans have been accusing the Government and asking what it has been doing. The Government wants to make sure that there is a legal framework to license traders in virtual assets. For instance, those trading in forex are under the regulation of CBK. Those dealing with equities will fall under CMA or whichever relevant regulatory body. To protect consumers, Part IV of the Bill requires that virtual asset service providers must maintain adequate safeguards for client assets and obtain appropriate insurance cover. This will ensure that in the event of fraud or operational failure, consumers can receive compensation. Additionally, virtual asset service providers must maintain a bank account in Kenya to enable effective monitoring and oversight. As I said earlier, many of the challenges Kenyans have encountered are because of the lack of a regulatory framework. It is not clear how to get your money back from a virtual asset trader if you need to. Before this policy was enacted, there was no framework. The Bill will ensure there are adequate safeguards like in the insurance industry that has the Premium Holders’ Compensation Fund. In case an insurance company collapses, there is a fall-back plan. Banks in this country have either an insurance bond or a cash guarantee in another financial institution to secure people’s deposits. But virtual assets trading has operated in a space where nobody can guarantee you. People have been sending money to bank accounts outside this country but there is no guarantee that they are protected. By maintaining a local bank account, it will become easy for CBK to monitor what is going on and protect investors in virtual assets."
}
]
}