The International Monetary Fund (IMF) advises Kenya to bring its cryptocurrency rules in line with international norms, as a means of tackling escalating risks related to money laundering, terrorist financing, and consumer safety. A document published on January 8 points out shortcomings in Kenya’s antiquated regulatory system for digital assets.
Based on the IMF’s findings, Kenya’s existing laws, which were created for conventional financial systems, do not provide adequate or enforceable regulation over cryptocurrencies. This lack of regulation has left the country susceptible to various threats such as frauds and crimes related to digital currencies. The IMF advises prompt changes in legislation to minimize these risks and enhance supervision.
A study’s findings indicate that nearly 4 out of 10 participants reported knowing a person who had experienced cryptocurrency scams, while a majority (62%) admitted to recognizing potential money laundering risks. In the month of February 2024, the Criminal Investigations Department issued a warning about deceptive activities on crypto platforms.
IMF Calls for Global Crypto Standards
In Nairobi, Kenyan legislators continue to have differing opinions about cryptocurrency regulations. This was evident during recent discussions. The International Monetary Fund (IMF) has suggested a well-organized regulatory system that would adhere to international standards while safeguarding consumers and fostering innovation in Kenya’s burgeoning cryptocurrency sector.
According to the International Monetary Fund, it’s important that the guidelines and oversight systems for cryptocurrencies in Kenya are consistent with global regulations and best practices.
The International Monetary Fund emphasized the importance of adhering to international standards in financial technology (Fintech), such as the Bali Fintech Agenda, guidelines from the Financial Action Task Force (FATF) on preventing money laundering and terrorist financing, and the regulatory framework for cryptocurrencies established by the Financial Stability Board.
To fill in any missing pieces, the International Monetary Fund (IMF) advises a multi-step approach. For the next six to twelve months, it’s suggested that officials closely examine the cryptocurrency market, boost cooperation between different departments, and establish clear regulatory boundaries. Once this 12-month period has passed, the focus should shift towards building a complete legal framework and strengthening supervisory abilities.
Besides enhancing supervision, the IMF suggested that Kenyan officials use consistent terminology, avoiding terms like “digital currency” and “virtual asset,” to maintain clarity in legal definitions.
Broader Financial Reforms
The International Monetary Fund (IMF) advocates for cryptocurrency regulation, as part of its ongoing involvement with Kenya’s financial infrastructure. In June 2024, a staff-level agreement was reached between Kenya and the IMF regarding policies to finalize the seventh review of Kenya’s Extended Fund Facility (EFF) and Extended Credit Facility (ECF) programs. These steps are taken to rectify budgetary deviations and enhance debt stability.
By December 2024, the International Monetary Fund (IMF) advised Kenya to improve its fiscal structure and minimize debt risks. Highlighting the need for robust policies, the financial institution emphasized that such measures are crucial in guarding against economic and climate-related disruptions. This underscores the importance of prompt action on regulatory and fiscal adjustments.
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2025-01-09 17:02