KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Sara Ndei, Cliffe Dekker Hofmeyr incorporating Kieti Law LLP
the extent that they are regulated by other laws in Kenya; • digital representations of fiat currencies issued by the CBK or any other jurisdiction; • non-fungible tokens (NFTs) that are not used for payment, investment or any other financial purposes; • NFTs that, by their nature and function rather than the designation given by its issuer, are not used for payment or investment purpos - es, and are not a digital representation of any financial asset; and • any other digital representations of value or rights sought to be expressly excluded by the relevant regulatory authority. 10.4 Regulation of “Issuers” of Blockchain Assets Currently, there are no regulations pertaining to issuers of virtual assets. However, the CMA views initial coin offerings as an offer of “securi- ties” , which should be subject to its regulation. Under the VASPs Bill, initial coin offerings would be a regulated activity that can only be under - taken by a licensed virtual asset service provider and approved by the relevant authority. 10.5 Regulation of Blockchain Asset Trading Platforms There are currently no regulations relating to virtual asset trading platforms or the secondary market trading of virtual assets. However, the VASPs Bill provides for the regulation of virtual asset trading platforms, which are centralised platforms that: • facilitate the trading and exchange of virtual assets for fiat currency or other virtual assets; • hold custody or control virtual assets on behalf of clients to facilitate an exchange; and
• purchase virtual assets from a seller when transactions or bids and offers are matched in order to sell them to a buyer. 10.6 Staking Currently, Kenya does not have specific laws or regulations explicitly governing cryptocurrency staking services. However, the VASPs Bill aims to introduce a regulatory framework for virtual asset activities. Although this proposed law does not explicitly mention staking, its broad definition of regulated “virtual asset services” would likely cover staking services. Under the VASPs Bill, activities involv - ing custodial wallet services, facilitating virtual asset transactions, providing investment advi - sory, or validating transactions would require registration or regulatory approval. Given this, staking service providers in Kenya would likely need to register and obtain the nec - essary regulatory approval under the proposed framework. Additionally, staking service pro - viders would need to comply with anti-money laundering and combating financing of terrorism (AML/CFT) obligations outlined in the VASPs Bill. 10.7 Crypto-Related Lending Currently, Kenya does not have specific regula - tions governing cryptocurrency lending servic - es. However, the VASPs Bill aims to introduce a regulatory framework that could apply to such services. Cryptocurrency lending generally involves pro - viding loans secured by cryptocurrency collat - eral, facilitating the transfer of cryptocurrencies between lenders and borrowers, and handling loan repayments or distributions. Although the VASP Bill does not explicitly define cryptocur -
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