The International Monetary Fund (IMF) has urged President William Ruto’s administration to align its cryptocurrency regulations with global standards amidst surging cases of money laundering and terrorism.
A report released by the Bretton Woods Institution on Thursday, January 9, revealed that Kenya was using outdated regulations in dealing with crimes linked to digital assets.
The notice, directed to the country’s Capital Markets Authority, noted that Kenya’s current laws were only designed to curb vices in the traditional financial markets and not digital assets.
In its recommendations, the IMF highlighted the need for Kenya to establish a framework that aligns with those established by financial watchdogs such as the Financial Action Task Force (FATF).
According to the multilateral lender, the development of the framework should consider the unique challenges and opportunities within the cryptocurrency market ensuring it is robust and transparent.
"There is a need for a clear legislative framework with specific definitions and classifications of crypto assets, effective inter-agency cooperation, and continuous market monitoring," the IMF recommended.
For the first six to twelve months, the IMF urged the Kenyan government to conduct empirical analysis, conduct education among regulators and foster collaboration.
Later, for the next 12 to 24 months, the lender suggested the country develop a legal and licensing framework and enhance supervisory regulations.
Additionally, the government was urged to collaborate with foreign regulators to mitigate risks associated with international exchanges and ensure effective regulation of digital assets.
While making the suggestions, the IMF noted that it came up with the recommendations after the country’s Capital Markets Authority requested it to do so.
“The diligent efforts of authorities to guide the public have underscored the need for a regulatory framework to mitigate risks and support market integrity,” IMF noted.
“The development of this framework should consider the unique challenges and opportunities within Kenya's crypto market, ensuring it is robust, transparent, and capable of fostering innovation while protecting consumers and maintaining financial stability,” it added.
