The International Monetary Fund (IMF) has released a technical assistance report urging Kenya to establish a transparent and stable regulatory framework for the cryptocurrency sector in response to a request from the Capital Markets Authority.
To help safeguard consumers while addressing potential risks of Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT).
The report highlighted that Kenya’s outdated regulatory framework has increased scams and criminal activity within the crypto market. During discussions in Nairobi, IMF officials noted a significant lack of consensus among lawmakers regarding crypto regulations. To address these challenges, they recommend that Kenya establish a regulatory framework aligned with global standards and best practices, such as the Bali Fintech Agenda and the FATF Recommendations for anti-money laundering and counter-financing of terrorism.
“The development of this framework should consider the unique challenges and opportunities within Kenya’s crypto market, ensuring it is robust, transparent, and capable of fostering innovation while protecting consumers and maintaining financial stability.” The IMF noted.
For short-term action (6–12 months), the IMF recommends empirical analysis, enhanced collaboration among regulatory authorities, and more precise regulation scopes. Medium- to long-term (12–24+ months) actions involve implementing legal frameworks, strengthening supervisory resources, and aligning regulations with international norms. Additionally, Kenya should define crypto assets clearly under financial laws, avoid conflicting terms, and engage with foreign regulators to manage risks and enforce regulations effectively.
The IMF recently established a $1.4 billion financing agreement with El Salvador as part of a 40-month Extended Fund Facility to tackle the balance of payment issues and support reforms. A key condition is the reduction of Bitcoin-related activities in the public sector, including limits on government Bitcoin transactions and requiring tax payments in U.S. dollars. The total support package, including contributions from other organizations, could exceed $3.5 billion. Emphasizing the importance of improving digital asset transparency and regulation to safeguard financial stability.
If you want to read more news articles like this, visit DeFi Planet and follow us on Twitter, LinkedIn, Facebook, Instagram, and CoinMarketCap Community.
“Take control of your crypto portfolio with MARKETS PRO, DeFi Planet’s suite of analytics tools.”
