In a recent development, Kenya will join the list of countries that have legalized the decentralized market. The bill was presented before the Kenyan legislature on November 21, 2022, and it proposes an amendment to the Capital Market Law which encompasses all crypto transactions on Kenyan exchanges.
This proposal comes amid the global trading market's over $2 trillion loss recorded this year and current forex analysis and forecast. Kenya will be among the first African countries to adopt this financial system.
Details of the Proposed Crypto Bill
This new bill is Kenya's introductory proposal for the inclusion of cryptocurrency in Kenya's financial regulatory structure. This proposed bill comes months after a UN report found that Kenya had Africa's biggest citizen percentage (about 8.5%) of blockchain investors. This underscores the country's susceptibility to the recent lowdown on cryptocurrency.
The new bill, tagged "The Capital Markets (Amendment) Bill, 2022", was designed to generate tax from all blockchain exchanges, wallets, and financial dealings. Upon the bill's passage into law, blockchain investors in Kenya will be obliged to pay income or capital gains tax to the Kenya Revenue Authority.
What Blockchain Investors in Kenya Should Expect
Based on the proposed bill, the financial regulator will charge income tax on cryptocurrency held for less than a year, after which capital gains tax will be demanded. The proposal also imposes a 20% excise tax on all blockchain transactions.
The proposal requires that investors disclose to the Capital Markets Authority the specifics of their holdings and asset worth. This will serve as a form of check and balances against irregularities on exchange platforms and the likelihood of internet fraud.
The Capital Markets Act will be modified following the proposed bill to include digital currency as a type of security. This allows the market regulator to license individual traders and establish a national electronic database of all blockchain transactions.
Abraham Kirwa, a member of the Kenyan Parliament, who sponsored the bill, claimed it would also enact consumer protection measures, such as establishing a fund "to protect investors from financial loss arising from the failure of a licensed broker or dealer." He further stressed that the bill would encourage optimal privacy protection.
If passed into law, the proposed bill will afford Kenyans a fair opportunity to participate in the global financial market. The trickle-down effect of this participation will be Increased domestic tax, which may salvage Kenya's economy.
Public Reactions to the Proposed Bill
The crypto market has steadily declined in value since November 2021, owing to concerns about inflation and increasing interest rates. It is unsurprising, therefore, that many Kenyan traders are unimpressed about the announcement.
