REGULATION | Competition Authority of Kenya Reportedly Rejects Seat in Joint Kenya Crypto Watchdog Citing a Lack of Mandate

The Competition Authority of Kenya (CAK) has turned down a proposal to join the Virtual Assets Regulatory Authority (VARA), a multi-agency task force formed to oversee the regulation of cryptocurrency activities in the country.

The CAK cited a lack of mandate in overseeing the sector as the primary reason for declining the invitation to sit on the Technical Working Group on Crypto Assets, a team constituted to draft policies on crypto regulation and oversight.

“The Authority is not a member of the Technical Working Group on Crypto Assets as its mandate, as provided for under the Competition Act No. 12 of 2010, does not extend to this sector,” CAK director-general Adano Wario told Business Daily.

This development comes even as the multi-agency team moves to develop a framework for regulating crypto assets, which have grown in popularity among Kenyans despite the absence of clear laws or regulatory guidance.

The Technical Working Group, composed of officials from:

• The Central Bank of Kenya (CBK)
• Capital Markets Authority (CMA), and
• The Financial Reporting Centre (FRC),

was set up following a Cabinet directive in 2022 to examine and propose a regulatory approach to digital assets.

Other members include:

• The Kenya Revenue Authority (KRA)
• The Ministry of ICT
• The Office of the Attorney General
• The National Police Service, and
• The Assets Recovery Agency (ARA).

The task force is expected to finalize its policy recommendations for consideration by Parliament.

While several countries globally have already enacted regulations governing crypto activities including:

• Taxation
• Consumer protection, and
• Anti-money laundering measures

Kenya is still at the early stages of formulating a legal framework.

The rejection by CAK means that Kenya’s key competition watchdog will not have a voice in shaping how digital markets – particularly those involving crypto trading platforms – are governed, despite growing concerns over consumer protection and fair competition in the fast-evolving fintech space.

So far, the VARA board and its constitution has been marred with claims of regulatory capture. A recent post on the Kenyan WallStreet publication claims collusion involving an advocacy group and a crypto exchange. The proposed regulation also saw the private advocacy group added onto the upcoming regulatory board.

Industry players have expressed concern in regards to how a private advocacy group was added onto a regulatory body together with other regulators such as the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA Kenya).

A respected digital assets lawyer has also expressed concern in how the VARA board is constituted saying there is direct conflict of interests when a private advocacy group, which represents its clients, is also part of a regulatory body.

Following uproar and continued interference in the upcoming bill, the Kenya government temporarily withdrew the bill for revision.

As the country struggles to control and manage the increasing use of cryptocurrencies, with an increase in crime facilitated by cryptocurrencies, the need for a truly neutral regulatory body that will serve the interests of the country will continue to be an ongoing concern even as the debate on accountability and good governance continues to pick pace.

Stay tuned to BitKE for deeper insights into the evolving Kenyan crypto crime and regulatory space.

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