The proposals mark one of the strongest attempts yet by an African government to bring cryptocurrency trading under the same reporting standards applied to banks and other financial institutions.

Under the draft law, crypto platforms operating in Kenya would be required to identify customers and disclose information linked to reportable users and controlling persons.

The Bill states: “Each virtual asset service provider shall file an information return with the Commissioner.”

Authorities are also proposing strict penalties for false reporting. Firms that submit inaccurate information could face fines of KES 100,000 ($775) for every false entry, prison terms of up to three years, or both. Similar penalties would apply to omitted information.

The proposed changes would significantly reduce the anonymity that has long defined much of the cryptocurrency sector.

Kenya’s push comes as governments worldwide intensify efforts to monitor digital asset transactions, improve tax collection and curb money laundering through cryptocurrencies.

The proposals align closely with the Organisation for Economic Co-operation and Development’s Cryptoasset Reporting Framework (CARF), which officially took effect in January 2026.

The framework requires participating countries to collect and exchange data on crypto transactions across borders.

More than 75 countries, including Singapore, Switzerland, Hong Kong, the United Arab Emirates, Brazil and South Africa, have committed to implementing the framework.

From 2027, tax authorities in participating countries are expected to begin automatically sharing information gathered from crypto exchanges and digital asset providers.

If passed, the Finance Bill would also allow Kenya to exchange crypto-related tax information with foreign governments under international agreements.

“Kenya may enter into an agreement with another country for the automatic exchange of information relating to transactions involving virtual assets,” the Bill states.

The proposals reflect the growing importance of digital assets in Kenya’s economy. According to KRA estimates, cryptocurrency transactions in the country reached KES 2.4 trillion ($18.5 billion) between 2021 and 2022, equivalent to nearly one-fifth of Kenya’s gross domestic product during the period.

Stablecoins have become particularly popular among businesses handling cross-border trade and payments.

Blockchain analytics firm Chainalysis estimated that Kenyans transacted about KES 426.4 billion ($3.3 billion) worth of stablecoins in the year ending June 2024, highlighting the increasing use of crypto assets outside traditional banking channels.

Kenya already imposes a 3 per cent digital asset tax on certain crypto transactions, but regulators have struggled to monitor trading activity because much of the market operates outside the formal banking system.

The new rules would give tax authorities direct visibility into who is trading digital assets, how much they are earning and where funds are moving.

Source: Africabusinessinsider