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Kenya’s Capital Markets Authority (CMA) commented on the state of crypto in its Q1 2021 Capital Markets Soundness Report.
After discussing crypto-statements from the Central Bank and SEC in Nigeria, Kenya’s CMA emphasized the high levels of crypto activity in the country:
“The 2020 Chainalysis 2020 Geography of Cryptocurrency Report reported that Kenya is the top 5 in global crypto-trading activity. The ranking is based on an analysis of data from over 54 countries. This data compared with reports from BlockchainCenter.Net show that Kenya leads the world in in bitcoin search interest at 94.7 %. Triple A, a blockchain and crypto company conservatively estimate that close to 16.5 % of Kenyans hold crypto currency.The aforementioned data denotes growing area of interest that has an impact on the soundness of Kenya’s capital market given its consideration by Kenyans as an alternative investment class. Following the 2018 report by Citibank showing Kenyans holding over Ksh. 162 billion in crypto vis a vis the Collective Investment Schemes portfolio as of December 2018 standing at over Ksh. 61.04 billion. This an area of keen interest to the Authority given its investor protection mandate also given the prevalence of scams on this front.”
Fintech firms with crypto applications (except crypto currencies) are being reviewed under the CMA’s Regulatory Sandbox, the report noted.
Going forward, the CMA recommended a more encompassing crypto-strategy across different regulators and hinted in particular to close coordination with the Central Bank of Kenya:
“CMA and CBK have equally been issuing statements on cryptocurrency but with convergence around their risks. However a more encompassing approach needs to be adopted on the broader FinTech space to onboard other financial sector regulators such as the Insurance Regulatory Authority, Retirement Benefits Authority and the Saccos Regulatory Authority so that the success of the CMA regulatory sandbox can be extrapolated to a joint Financial Sector Regulatory Sandbox, where joint expertise from the various subsectors may be leveraged to test various forms of crypto-assets and other FinTechs to inform future oversight of the same. Specific to crypto-assets the Authority is keen on forging a common stance and joint-messaging with the CBK going forward.”