- Kenya’s new government has become interested in Kenya’s rapid crypto adoption rate and is settling on developing new crypto tax laws.
- Africa’s crypto ecosystem owes a lot to Kenyan crypto traders and innovators for consistently striving to create more income and new ways of aiding the content.
- Its legislation is now considering the Capital Markets Bill, 022. It would change the country’s law and regulate ad tex digital assets.
Africa is a common term and an unexpected continent to be leading major crypto stories throughout the globe. The crypto adoption rate in Africa alone is enough to cause ripples throughout the crypto ecosystem. Developing countries are competing with first-world countries regarding the crypto trading volume. Many thought it was impossible.
However, various African countries’ somewhat harsh economic state has driven local citizens to search for alternative means to earn that extra cash. South Africa, Nigeria, Ghana, Egypt and Kenya are among the first countries to pioneer Africa’s crypto space. Their trajectory and momentum are steadily increasing. In recent news, Kenya’s new government has expressed its interest in cryptocurrency and now seeks to apply Crypto Tax laws to benefit the millions of crypto traders.
Kenya’s crypto ecosystem thus far
It is no new fact that Kenya is none of the leading African countries in almost all technological advancements, alongside South Africa, Egypt and Nigeria. Hence, it is no surprise that Kenya, although small, participated in the Golden Age of Bitcoin back in 2009.This sudden rush to the richness of the few crypto traders within the country rippled throughout its entire technology ecosystem. It caused various tech and non-tech citizens to partake in the alluring notion of Bitcoin. Throughout the years, it has steadily increased its crypto adoption rate. Within the year, it has severely dethroned its primary competitor Nigeria.
A UN report officially recognized Kenya as the highest-adopting country in Africa’s crypto ecosystem. With an estimated 4.5 million people, 8.5% of Kenya’s total population. This figure clearly illustrates the enthusiasm and zeal Kenyans have for creating additional sources of money.
It doesn’t stop at crypto; the innovation found within the country is also astounding. Several Kenyan-based blockchain startups have revolutionized decentralization in their own country and Africa. This has inspired various crucial figureheads such as Bitcoin, Polygon, and Ethereum have set up their sites in Kenya to acquire additional projects and staff members within their franchises.
Blockchain startups such as Pezesha, a Kenyan Fintech that advocates for African decentralized finance adoption. It recently raised $11 million from Women’s World Banking and Cardano-LInked IOG to fule its scaling efforts to core markets.
Aza Group, formerly known as Bitpoesa, traces its roots back to Kenya. The fintech platform’s primary goal is to increase the crypto adoption rate in Africa and allow the unbanked to turn to digital assets. This year alone, it acquired $20 million to focus its scaling efforts in South Africa.
Africa’s crypto ecosystem owes a lot to Kenyan crypto traders and innovators for consistently striving to create more income and new ways of aiding the content. Kenyan crypto traders achieved all this despite the government’s reluctance to support cryptocurrency and CBDC. Now a shift in attitude has occurred as the government debates establishing new crypto Laws for the country.
New Kenyan Crypto Tax Laws
Kenya’s new government has become interested in its rapid crypto adoption rate. It is settling on developing new crypto tax laws. According to reports, MP Abraham Kirwa is seeking to introduce a 20% exercise tax n every cryptocurrency transaction executed in the country.
Its legislation is now considering the Capital Markets Bill, 022. It would change the country’s law and regulate ad tex digital assets. Once passed, crypto traders must pay Kenya Revenue Authority income tax or capital gains tax made with each transaction. This is, however, not the first crypto law made in Kenya; two years ago, its government came up with the Digital Service Tax as part of the country’s Finance Act 2020. This new law introduced a 1.5% tax on services included.
Currently, Kenya’s adoption rate is ranked in the top 20 economies in the crypto market share only followed. However, not all Kenyan crypto traders are enthusiastic about other crypto tax laws. Initially, the government abandoned crypto trades, and the Central Bank of Kenya played Ceasor and washed their hands clean from anything associated with crypto.
Also, Read Pezesha, a Kenyan fintech focused on women’s empowerment in Africa.
This year, the CBK governor rejected bitcoin as a country’s reserve currency. In truth, the backbone of individual crypto traders built Kenya’s crypto adoption rate. Placing taxation on a venture only after significant associations recognize it does not sit with various crypto traders. In addition, the crypto tax law will require individuals to forward their crypto-based information and activities to a centralized system for taxation. This essentially defeats the entire purpose of crypto, providing complete control of digital assets to its users.
However, this step for the Kenyan government in cryptocurrency may be a doorway to more improvements. South Africa recently recognized cryptocurrency as a financial asset, its start was different from Kenya’s, but it eventually embraced digital assets. Likewise, this may be a different start than Kenyan crypto traders had hoped for. Still, its step within Africa’s crypto ecosystem will pave the way to other possibilities, such as a Kenyan CBDC. Will this bill become law, or will it fall short? All it is left is to wait and observe.