Kenya proposes law requiring digital asset companies to establish local offices

According to Bloomberg, the Kenyan government is drafting a law requiring virtual asset service providers to establish local offices to strengthen regulation of the rapidly growing digital asset industry. The proposed policy does not apply to assets that cannot be transferred, traded, or used for payment and investment outside of closed ecosystems, and aims to address gaps in legal and regulatory frameworks in the field of virtual assets, as well as address issues such as consumer protection, governance, data privacy, and cybersecurity. Kenya has introduced a 3% income tax on digital asset transactions in 2023, but has not yet established a comprehensive industry regulatory framework. The government hopes to fill regulatory gaps through this move while addressing industry risks such as money laundering, terrorism financing, tax evasion, fraud, and cybercrime.