The International Monetary Fund (IMF) has urged the Kenyan government to establish a well-defined and stable regulatory framework for its cryptocurrency sector. This recommendation aims to safeguard consumers and mitigate risks tied to Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT). Following a request from the Capital Markets Authority of Kenya, the IMF released a technical assistance report on January 8, specifically addressing the country’s approach to crypto regulation.
The IMF highlighted that Kenya currently relies on outdated regulations applicable to traditional financial markets, which provide limited or no legal structure for the cryptocurrency realm. This gap has contributed to a rise in crypto-related scams and other illicit activities. In discussions held in Nairobi, IMF representatives observed a notable lack of consensus among Kenyan lawmakers regarding the regulation of crypto assets, indicating significant uncertainty in this area.
To address these challenges, the IMF recommended that Kenya create a regulatory environment that adheres to international standards. The proposed framework should take into account the specific obstacles and opportunities present in the country’s cryptocurrency market. The IMF emphasized the importance of developing a robust and transparent regulatory system that promotes innovation while ensuring consumer protection and financial stability.
The IMF’s recommendations include a series of short-term actions, such as conducting empirical research, fostering collaboration among regulatory bodies, and clarifying the regulatory scope. For the medium and long term, it suggests establishing a comprehensive legal and licensing framework and enhancing supervisory capacity to align with global regulatory standards. Furthermore, Kenya is encouraged to seek input beyond mere surveys to gain a deeper understanding of its crypto market dynamics.
Lastly, to better manage the risks associated with international exchanges operating in the country, the IMF urged Kenyan authorities to engage with foreign regulators. This would promote cross-border cooperation essential for effective regulatory enforcement and consumer protection within the growing cryptocurrency landscape.
