Money's influence on administrative rules and policies

Money's influence on administrative rules and policies

In the dynamic world of digital assets, cryptocurrency lobbying has proven to be a significant force shaping government policies and regulatory approaches in Kenya and South Africa. This influence is evident in the recent reforms and ongoing discussions in both countries.

**Kenya's Cryptocurrency Evolution**

The Kenyan government has experienced a notable shift in its stance towards cryptocurrencies, thanks in part to the concerted efforts of key industry players such as Swypt, Busha, HoneyCoin, Luno, and PwC. These stakeholders successfully lobbied for the scrapping of a controversial 3% digital asset tax, which was originally proposed in 2023 and reduced to 1.5% before being eliminated entirely in 2025.

The lobbying coalition emphasized the negative impact on regional economies, noting that neighboring countries often follow Kenya’s lead. As a result, Kenya's approach to cryptocurrency regulation is now considered advanced and ambitious, with a new Virtual Assets Bill that introduces a purpose-built legal system, mandatory licensing, strict fitness and cybersecurity standards, and alignment with anti-money laundering and counter-terrorism financing (AML/CFT) frameworks.

**South Africa's Regulatory Clarity**

While not as publicized as Kenya’s recent tax debate, South Africa’s regulatory clarity and licensing of crypto platforms have been shaped by ongoing engagement between the industry and regulators. Luno, a major exchange, has played a key role in promoting crypto payments, with retail transactions averaging 2 million Rand monthly.

South African regulators have classified digital assets as financial products, enabling multiple platforms to be licensed and operate within a predictable regulatory framework. This approach has fostered a growing crypto payments ecosystem.

**Current Regulatory Approaches**

Kenya's Virtual Assets Bill establishes a tailored legal system for virtual assets, moving away from adapting old regulatory models. The bill mandates licensing for virtual asset service providers (VASPs), sets capital and cybersecurity requirements, and ensures compliance with AML/CFT standards. The regulatory approach aims to boost consumer confidence and provider legitimacy, encouraging local fintech growth and job creation.

In South Africa, digital assets are classified as financial products, allowing for the licensing of crypto platforms and clear regulatory requirements. This has provided a stable environment for crypto businesses to operate and expand.

**Comparison**

| Country | Lobbying Impact | Current Regulatory Approach | |--------------|---------------------------------|-------------------------------------------------------------| | Kenya | Tax scrapped after industry push; new Virtual Assets Bill | Purpose-built legal system, mandatory licensing, AML/CFT, regional influence[1][2][4] | | South Africa | Industry engagement shapes regulation; regulatory clarity | Digital assets as financial products, licensing, stable payments ecosystem[2][3] |

Both countries are now positioned as regional leaders in fintech regulation, with Kenya’s approach especially influential in East Africa.

The VACC, for instance, advocates for a framework similar to the EU's MiCA regulations to ensure Kenya remains competitive in the digital asset market. Meanwhile, VISA has opened applications for Cohort 4 of its Africa Fintech Accelerator Program with a deadline of March 25, 2025.

In Kenya, the Kenya's Virtual Assets Chamber of Commerce (VACC) has submitted a set of policy recommendations to Kenyan regulators, urging changes to the proposed digital asset tax (DAT) and advocating for a Kenyan stablecoin.

As the landscape of cryptocurrency regulation continues to evolve in Kenya and South Africa, both countries are poised to play significant roles in shaping the future of digital assets across Africa.

1. The influence of cryptocurrency lobbying has resulted in advanced and ambitious cryptocurrency regulation in Kenya, with a new Virtual Assets Bill that introduces a purpose-built legal system for digital assets.
2. The lobbying coalition in Kenya successfully lobbied for the elimination of a controversial digital asset tax, originally proposed in 2023.
3. The virtual asset service providers (VASPs) in Kenya are now mandated to comply with anti-money laundering and counter-terrorism financing (AML/CFT) frameworks.
4. In South Africa, digital assets are classified as financial products, enabling multiple platforms to be licensed and operate within a predictable regulatory framework.
5. The regulatory clarity in South Africa has fostered a growing cryptocurrency payments ecosystem, with retail transactions averaging 2 million Rand monthly.
6. The abolition of a digital asset tax in Kenya, advocacy for a Kenyan stablecoin, and push for changes in the proposed digital asset tax are notable policy recommendations made by the Kenya's Virtual Assets Chamber of Commerce (VACC).
7. With its regional influence in East Africa and advocacy for regulations similar to the EU's MiCA, Kenya is positioning itself as a key player in shaping the digital asset market.
8. The ongoing dynamics in the world of digital assets have positioned Kenya and South Africa as regional leaders in fintech regulation, with potential for significant roles in shaping the future of digital assets across Africa.
9. The cryptocurrency lobbying efforts in both Kenya and South Africa have demonstrated the potential for innovation in web3, fintech, and finance, and serve as a model for crypto lobbying in other African nations like Nigeria, encouraging investment and business growth in technology.

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