Introduction
In a landmark move for Kenya’s blockchain and digital asset ecosystem, the Virtual Asset Chamber of Commerce (VACC) recently took center stage at the final public participation session on the Virtual Asset and Virtual Asset Service Providers (VASP) Bill 2025, held on January 29, 2025. This critical legislative process aims to define the future of virtual assets in Kenya through a comprehensive regulatory framework. While the bill seeks to establish clarity and promote innovation, industry stakeholders have voiced significant concerns over certain provisions—particularly the proposed 3% Digital Asset Tax (DAT).
The VACC’s involvement underscores the need for a collaborative and balanced approach to regulating Kenya’s growing digital economy. Here’s everything you need to know about this milestone event, what the VASP Bill 2025 entails, and how VACC is shaping the future of Kenya’s crypto space.
What is the VASP Bill 2025?
The VASP Bill 2025 is a groundbreaking piece of legislation designed to regulate virtual assets, such as cryptocurrencies, stablecoins, and other digital tokens, as well as the service providers that facilitate their use. It touches on key areas like:
- Licensing and oversight
- Taxation and compliance
- Consumer protection
- Innovation and cross-border transactions
The bill aims to position Kenya as a leader in Africa’s tech-driven economy—popularly referred to as “Silicon Savannah”—but not without controversy. Among the most debated provisions is the 3% Digital Asset Tax (DAT), which has raised red flags across the industry.
The 3% Digital Asset Tax: A Risk to Innovation?
According to VACC and other industry leaders, the 3% tax on digital asset trades could spell disaster for Kenya’s blockchain ecosystem. To put this into context, Indonesia, the only other country with a similar tax, imposes a modest rate of 0.1% to 0.2%.
“The industry cannot survive a tax that is ten to thirty times higher than standard exchange trading fees and far exceeds our customers’ profit margins. This tax threatens to make the industry fundamentally unviable, leaving regulators with nothing to regulate or tax,” said Mr. Allan Kakai, a Director at VACC, during his presentation to the National Treasury.
VACC’s Role in Advocating for Fair and Progressive Regulations
As Kenya’s leading policy think tank for blockchain and virtual assets, VACC has been at the forefront of the push for industry-friendly policies. During the public participation session, VACC submitted a comprehensive memorandum addressing the industry’s concerns and providing actionable recommendations to the National Treasury.
Key Contributions by VACC:
- Robust Industry Representation: VACC amplified the voices of virtual asset stakeholders, advocating for fair taxation, operational clarity, and innovation-friendly policies.
- Progressive Recommendations: Drawing on international best practices such as the EU’s Markets in Crypto-Assets (MiCA) framework, VACC proposed regulatory measures that promote cross-border transactions and global competitiveness.
- Call for Ongoing Engagement: VACC emphasized the importance of continued collaboration between regulators and industry players to shape a future-proof regulatory framework for Kenya’s digital economy.
VACC’s Key Recommendations:
- Encouraging Entrepreneurship & Investment: Avoid overregulation and high compliance costs to attract foreign direct investment.
- Alignment with Global Standards: Harmonize policies with international frameworks to support global competitiveness and cross-border transactions.
- Regulatory Clarity on Licensing: Introduce a tiered licensing system to reduce regulatory duplication and accommodate multi-service providers.
- Stablecoin Innovation: Provide clear guidelines on stablecoins to enhance financial inclusion and drive economic efficiency.
- Reasonable Taxation: Reconsider the 3% DAT in favor of a more sustainable rate that encourages growth and innovation.
Why This Matters for Kenya’s Digital Future
Kenya is poised to become a regional hub for blockchain innovation, but achieving that vision requires balanced regulations that foster growth while protecting consumers and ensuring compliance. The proposed 3% DAT not only risks driving investment away but could also force the sector underground, undoing years of progress in developing Kenya’s digital economy.
Without urgent reconsideration, Kenya risks strangling its burgeoning blockchain ecosystem, deterring global players, and losing its competitive edge in Africa’s digital economy.
Next Steps and Continued Dialogue
VACC commends the National Treasury for fostering inclusive dialogue and has called for continued engagement at the stakeholder workshop on February 6, 2025, at the Lake Naivasha Crescent Hotel. This workshop will offer an opportunity to refine the VASP Bill 2025 and align Kenya’s virtual asset regulations with global best practices.
The Virtual Asset Chamber of Commerce remains committed to advocating for progressive, inclusive, and globally competitive regulations.
How to Get Involved
Members of the media, industry stakeholders, and the public are encouraged to participate in the dialogue by submitting feedback to pstnt@treasury.go.ke. VACC is also open to providing further information, interviews with policy experts, and access to its detailed memorandum.
For more information, contact:
Ms. Sheila Waswa
Co-Chair, Public Relations Committee
Virtual Asset Chamber of Commerce (VACC)
Email: policy@virtualassetchamber.com
Phone: +254 702 349 664
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