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Kenya passes a bill to regulate and tax crypto, aiming to provide clarity and prevent financial crimes

Kenya's bill strategically positions crypto assets as securities

Kenya is set to usher in a new era by introducing the Capital Markets (Amendment) Bill, 2023. This forward-thinking legislation, recently approved by the Finance Committee, will now be debated in the National Assembly, marking an important step in Kenya’s approach to regulating and taxing crypto.

The bill strategically positions crypto assets as securities, laying the groundwork for comprehensive regulation. Kenya hopes to achieve legal clarity while also fortifying its financial ecosystem against the potential risks associated with the burgeoning digital currency market.

One of the bill’s most important provisions is imposing capital gains tax on crypto transactions, both within wallets and exchanges.

This move is intended to generate revenue and serve as a deterrent to illicit financial activities involving digital currencies.

Furthermore, the draft bill requires the Kenya Revenue Authority to report all crypto transactions in Kenyan shillings, ensuring transparency in the burgeoning crypto landscape.

The Chairman of the Finance Committee, Kimani Kuria, emphasized the importance of passing this bill, saying, “We need laws to govern millions of Kenyans trading in crypto.”

This sentiment emphasizes the importance of a strong legal framework to protect the interests of the country’s growing number of cryptocurrency traders.

The draft bill specifies taxation mechanisms for cryptocurrency transactions. Kenyans who engage in crypto transactions will have to pay capital gains tax, while banks will play a role by deducting a 20% excise duty on commissions and fees.

Multiple stakeholders are involved in this collaborative approach to ensuring the proper regulation of the digital currency market.

Kenya’s proactive move is consistent with global efforts to regulate cryptocurrencies, such as the UK’s pursuit of undeclared crypto assets.

The passage of this bill not only establishes a precedent in the region but also places Kenya at the forefront of adapting to the volatile landscape of the digital currency market.

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James Wilson is a crypto writer and researcher with over 5 years of experience in the industry. He is a graduate of the University of California, Berkeley, where he studied computer science and economics. After graduating, he worked as a software engineer at a major tech company before transitioning to a career in crypto.