The International Monetary Fund (IMF) has urged Kenya to tighten its grip against the use of cryptocurrencies for illicit activities. The IMF made the disclosure on Wednesday through a technical assistance report on the crypto regulations of the Eastern African country.
Meanwhile, the report came in response to a request from the Capital Markets Authority of Kenya. More so, the IMF advised Kenya to protect investors and the cryptocurrency market against money laundering and terrorism financing.
The warning surfaced amidst the growing adoption of cryptocurrencies in the country. Late last year, Keyan generated huge attention after its national fire bridge launched a BTC reserve.
By that, the Kenya National Fire Brigades Association (KENFIBA) became the first labor union in the nation to adopt BTC. Despite the increasing adoption of digital assets in the country, the IMF is sounding a warning that the country needs to amend its existing regulatory framework.
IMF Pointed to the Need for New Crypto Laws in Kenya
Furthermore, the financial agency of the United Nations explained that Kenya must set up a “predictable regulatory environment” to combat criminal activities in the sector. The IMF added that Kenya is using its outdated regulations for traditional markets to regulate the digital assets sphere.
According to the agency, the outdated laws have limited impact and cannot stop the loopholes in the crypto market. Consequently, the IMF attributed the increasing usage of virtual assets for scams and other criminal activities in Kenya to the defect in its regulatory system.
While making its investigations, the IMF stated that it realized how lawmakers in the country lack consensus on how to regulate cryptocurrency. Due to the high uncertainty, the agency encouraged Kenya to design a regulating system that aligns with global standards.
The International body further advised that the new laws should consider the shortcomings and strengths of the country’s virtual assets market. Additionally, the agency opined that the framework be robust, transparent, sustainable, foster innovations, and protect investors.
As part of its recommendation, the IMF urged the Eastern African nation to interact with international regulators to mitigate the risks associated with foreign exchanges operating in the country. The International agency elucidated that partnership with foreign regulators will help facilitate cross-border partnerships for effective enforcement of its crypto laws.
Likewise, the IMF stated that Kenya will need to define cryptocurrencies under financial laws to avoid confusion.