31% of Kenyan banks ready to deal in cryptocurrency: CBK

Thirty-one percent of
Kenyan banks are ready to venture into virtual assets like cryptocurrencies and
non-fungible tokens (NFTs) as the government works to regulate and incentivize
adoption in the growing sector.

Virtual assets are digital representations
of value that can be traded, transferred, and used for payment or investment,
often traded through decentralized systems like blockchain. 

A new survey by the Central Bank of Kenya
(CBK) shows that commercial and microfinance banks have expressed interest in
virtual assets, noting the assets’ potential opportunities in enhancing
financial access to the unbanked.

“… 31 percent of the respondents indicated
that they were highly likely to undertake activities in the area of virtual
assets,” CBK’s 2024 Innovation Survey says.

Banks pointed out that crypto and NFTs
provide alternative payment and investment channels, improving transaction
speed, and reducing transaction costs, CBK said.

However, the lenders highlighted their
fears with the risks associated with digital currencies, such as challenges in
enforcing anti-money laundering, countering the financing of terrorism, and
counter-proliferation financing controls.

Others are cybersecurity risks, fraud, and
high volatility.

“Most financial institutions (35 percent)
emphasized the need for regulatory frameworks governing digital innovation.
This includes areas such as digital lending, open banking, application
programming interfaces standardization, digital identity blockchain, virtual
assets including crypto assets, and digital-only banking,” the report says.

Cryptocurrency has continued to gain popularity
globally in recent years. Examples
are Bitcoin and Binance, mostly used to preserve
savings, pay for goods and services internationally, and make remittances.

But while they are still not mainstream in
Kenya and banks are not allowed to deal in them, multiple researches have shown
they are regularly used even without regulation.

The government has painted a huge potential
for the virtual assets sector, which has an estimated four million users,
according to United Nations Trade and Development (UNCTAD) figures.

Traditionally, because
cryptocurrencies are not issued by any central authority, they are free from
government interference or manipulation.

Unlike banks and credit card companies
which verify transactions, using cryptocurrencies is seen as an easier way of
transferring funds directly between two parties globally.

Additionally, one does not need to buy
euros or dollars or pay to use cross-border money transfer services like
Western Union.

But crypto’s decentralised nature has made the sector be exploited for illegal activities like
theft, fraud, and money laundering. Their prices are also very volatile and investments require accurate
price monitoring.

In 2014, Kenya was included in
the Financial Action Task Force’s (FATF) grey list for, among other
reasons, the lack of a clear strategy for the prosecution of money laundering
offences.

Another was also a failure to put in place
regulatory frameworks to monitor and regulate virtual assets’ use, or banning
them entirely, due to the terrorism financing risks they are associated with.

Recently, the government has moved to regulate the sector through the Virtual Asset Service Providers Bill, 2025 which requires crypto firms operating in the country
to set up local offices and appoint directors subject to approval by a
regulatory body such as the Capital Markets Authority (CMA).

The Kenya Revenue Authority (KRA) has
additionally said it will introduce a new tax system integrating real-time
crypto transaction monitoring to tap into – and catch tax cheats and criminals
in – the local crypto sector.

Meanwhile, the government has sought
to incentivise crypto
adoption. In the 2025 Finance Bill, the National Treasury is slashing the three
percent levy on digital assets trade introduced in 2023 by half to 1.5 percent.

Cabinet Secretary John
Mbadi has said the reduction to the levy aims to align it with the 1.5 percent
turnover tax levied on businesspeople whose gross turnover is between Ksh.1
million and Ksh. 25 million a year.

Mbadi says crypto traders have been pushing
for a lower levy.