KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Sara Ndei, Cliffe Dekker Hofmeyr incorporating Kieti Law LLP
6.3 Impact of the Emergence of Cryptocurrency Exchanges
6.4 Listing Standards The listing of shares (stocks) and fixed income securities (like bonds) on a securities exchange in Kenya is subject to the following regulations and guidelines. • The Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations, 2002: this primary legislation from the CMA establishes the overarching framework for how issuers can list and trade their securities on a securities exchange. • Nairobi Securities Exchange (NSE) Listing Rules: these rules are specifically tailored to the listing of securities on the NSE, but they are in line with the Capital Markets (Securi - ties) (Public Offers, Listing and Disclosures) Regulations. The Listing Rules outline the detailed requirements and procedures com - panies must follow to list on the following NSE different segments: (a) the Main Investment Market Segment (MIMS), designed for larger, well-estab - lished companies with a proven track record; (b) the Alternative Investment Market Seg - ment (AIMS) offers more flexible listing criteria to accommodate smaller and medium-sized enterprises (SMEs); (c) the Fixed Income Securities Market Seg - ment (FISMS) facilitates the listing and trading of fixed income securities, primar - ily corporate and government bonds; and (d) the Growth Enterprises Market Segment (GEMS) caters to high-growth compa - nies and start-ups, giving them access to capital markets even without extensive profitability history. 6.5 Order Handling Rules The handling of orders is prescribed by the Capi - tal Markets (Conduct of Business) (Market Inter -
Cryptocurrency exchanges are currently not regulated in Kenya, but both the CBK and the CMA have taken stances on the regulation of cryptocurrencies. In the past, the CBK has issued cautionary state - ments in relation to dealing in cryptocurrencies, warning Kenyans that the cryptocurrencies are not legal tender in Kenya and therefore there is no protection if the cryptocurrency exchange fails or goes out of business. On the other hand, the CMA views cryptocurren - cies as “securities” subject to regulation under the Capital Markets Act; this stance was legally confirmed by the High Court in the case of Wise - man Talent Ventures v Capital Markets Authority [2019] eKLR. There have been progressive steps towards the regulation of cryptocurrency in Kenya. • The Finance Act of 2023 introduced a 3% tax on income earned from the transfer or exchange of digital assets (including crypto - currencies). The Finance Act also requires the owners of a crypto exchange to register in Kenya (for purposes of taxation), withholding the digital asset tax and filing returns with the Kenya Revenue Authority. • In January 2025, the draft VASPs Bill and National Policy on VAs and VASPs were circulated for public comment. If enacted, the VASPs Bill will lay the groundwork for the regulation of cryptocurrencies and VASPs operating in Kenya, mitigating risks to Ken - ya’s financial system and reputation, while promoting transparency and accountability in the growing virtual asset industry.
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