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Not so recently, technocrats devised a new digital payment system anchored on blockchain technology. Names such as Changpeng Zhao, Sam Bankman-Fried, and Brian Armstrong are spoken off highly in the Forbes Billionaires list for the huge strides made in the volatile world of cryptocurrency.

The uniqueness of this system lies in its encrypted and decentralized form. Essentially, this means that there is no central authority that manages and maintains its value. This digital payment system is known as cryptocurrency. Financial regulators all over the world have grappled with how to regulate the growing number of digital cryptocurrencies and tokens.

Among players in the blockchain world, words like Bitcoin, Ethereum, Bitcoin Cash, USDC, XRP, Litecoin, Chainlink, Uniswap, Cardano, and Solana are not new phrases. All these are the various forms of cryptocurrency. Other financial regulators refer to them as crypto assets because they hold the view that they do not qualify to be termed as currencies.

Research carried out by a US blockchain analysis firm revealed that Africa’s cryptocurrency market increased by 1,200% in the year 2021 alone, bringing its total crypto assets to USD 105.6 billion. This was perhaps the Many jurisdictions have made attempts to operationalize the sector through regulation; in order to derive benefit from the secure nature of the system.

On 20th October 2022, South Africa’s financial conduct regulator made a declaration requiring cryptocurrency operators to obtain licenses in order to operate legally. As early as 2020, the Securities and Exchange Commission (SEC) in Nigeria also made clear its intention to regulate digital assets like cryptocurrencies. The above examples are illustrative of the fast-rising influence of crypto-assets since inception.


In 2018, the Central Bank of Kenya Governor published a circular warning banks in Kenya against entertaining any form of crypto-currency dealing. The Capital markets on the flipside appeared to be blowing hot and cold on the issue, numerously contending that cryptocurrencies are securities that ought to be listed in the stock exchange.

Their tenacity to maintain this position at some point evolved to a litigation battle in the case of Wiseman Talent Ventures v Capital Markets Authority [2019] eKLR. The High Court held in its decision that despite the fact that crypto-currencies are unregulated, the balance of convenience tilted in favor of investor protection. Investors had made triumphant boosts to start ups dealing in the crypto industry. The absence of regulation exposed them to immense fiscal danger. Therefore, the unregulated nature necessitates the need for the Capital Markets Authority to exercise the supervisory power of crypto dealers.

In the wake of the conundrum experienced and illustratively set out in the preceding paragraph, just the Kenyan legislators recently opted not to be the lazy students in the classroom in so far as the fast-rising flame of crypto-assets is concerned.

The Capital Markets (Amendment) Bill, 2022, sponsored by the Member of Parliament for Mosop Constituency, Honorable Abraham Kirwa, is designed to introduce taxation of the crypto exchanges and digital wallets, in addition to imposing transaction taxes similar to excise duty charged on bank transactions. Perhaps the bill is a seismic response to the Capital Markets Authority’s acknowledgment that there was increased crpto-related activity despite the unregulated character of the industry.

The capital markets Authority is expected to be the key player in this new development. Individuals and companies trading in cryptocurrency shall be required to furnish details to the Authority for chain transmission to the Kenya Revenue Authority for taxation purposes.

Regardless of the untraceable nature of crypto-assets, individuals and companies that trade in the digital assets might soon be liable for income tax if the bill is passed and assented into law. Additionally, to breathe life into the name currency as the cryptos are known in other circles, crypto-currencies may also be subject to the 20 percent excise duty charged on all commissions and fees emanating from bank transactions.

The Kenya Revenue Authority shall also make an additional catch by levying capital gains whenever there is increased market value of a crypto whenever a trader or seller sells or uses the digital currencies in a transaction.

This new development may be seen as a positive to Kenya’s fintech acumen, ranking higher than developed countries such as the United States of America, renowned for their fintech wherewithal.


In as much as there is lack of uniformity in regulation across the world when it comes to this subject, the move by the Kenyan legislators is commendable. We can only hope that it finds favor on the floor of the legislative houses

“The information provided in this article is intended for general legal advice and does not constitute legal advice for specific transaction or case. Since each transaction presents a unique legal context, it is advisable to retain a legal adviser for specific transactions.”

To contact CR Advocates LLP, send us an email on or call +254 100979081 or Book a strategy call HERE or direct message us HERE on WhatsApp at your convenience. Our legal team will be happy to help you.


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