With Donald Trump winning the US presidential election on 5 November, Bitcoin’s (BTC) value surged, largely due to the pro-bitcoin stance of the incoming president. A month later, in December, BTC reached a historic high of $106,490, around R2 million, following Trump’s appointment of pro-cryptocurrency regulator Paul Atkins as head of the US Securities and Exchange Commission (SEC) and billionaire David Sacks as the newly created White House “crypto czar”. However, the US isn’t the only country that has found cryptocurrencies to be an industry worth implementing governmental and policy changes over.
Bringing it back home, cryptocurrencies have sparked significant interest across the African continent despite their highly volatile and speculative nature. Their foundation on decentralised blockchain technology, which records and verifies transactions transparently and permanently without needing a central authority and eliminating the need for intermediaries, attracts many investors. Between July 2023 and June 2024, sub-Saharan Africa received approximately $125bn (R2.4 trillion) through blockchain – more than Kenya’s annual GDP.
Speaking of Kenya, the state is often cited as leading the charge in cryptocurrency adoption but is not yet quite on par with giants in the space like Nigeria and South Africa. Their problem? A lack of regulation.
In a newly published technical report, the International Monetary Fund (IMF) has advocated for Kenya to update outdated regulations and align with international standards.“The current laws offer little to no binding legal basis”, states the organisation, pointing out the glaring gaps that facilitate scams and other illicit activities.
In response, Kenya’s National Treasury has opened a public consultation on a new bill and policy aimed at regulating cryptocurrencies and virtual asset companies like crypto exchanges. “The policy and the bill provide a framework for oversight and development of the virtual assets ecosystem,” the National Treasury said in a notice. The National Treasury is undertaking public participation on the policy and the bill and hereby invites members of the public to submit their views.
According to Chainalysis, 4 million Kenyans hold crypto assets. Without this much-needed regulation, it is difficult to establish the true value of digital assets, which could run into millions of dollars. As pointed out by the IMF, “There is currently a significant degree of uncertainty and a lack of consensus among authorities regarding the actual size, structure, and risks of the Kenyan crypto assets market.”
With public participation about to start, all eyes, Kenyan and otherwise, will be on how the government navigates the digital assets market.
However, Kenya is not the only country that has been urged to change its crypto regulations. 5,000 kilometres away in South Africa, crypto exchanges have called on authorities to remove a prohibition barring pension funds from investing in crypto assets. They argue that regulations giving pension funds an option to invest in other assets need to be reviewed to allow South Africans to benefit from the growth in the value of crypto assets.
“While cryptocurrencies are currently excluded from the asset classes permitted to be held in collective investment schemes, a shift to a more permissive environment, in line with global financial market leaders like the US and UK, could catalyse increased institutional participation and further boost investor protection,” said Marius Reitz, general manager at Luno Africa, a crypto investment platform.
In January 2023, Regulation 28 of the Pension Funds Act was updated to permit pension funds to allocate more to specific asset categories, including offshore investments (capped at 45%), infrastructure (45%), hedge funds (10%), and private equity (15%). However, crypto assets were explicitly excluded.
Frank Leonette, CEO of the newly launched crypto exchange AfriDax, emphasises that Regulation 28 must adapt to keep pace with the rapidly evolving financial landscape driven by innovations such as crypto assets and the tokenisation of real-world assets on blockchains.
“Many South Africans want to diversify their pension funds and benefit from the incredible performance of Bitcoin and similar crypto assets.”
South Africa’s robust financial regulatory framework has saved us from dubious financial practices in the past, so perhaps the caution around pensions is warranted.
With these changes on the horizon, all eyes are on how Kenya and South Africa will shape the future of crypto regulation. Will these new rules unlock opportunities or stifle innovation?
This article has been edited on 16 January 2025 for clarity and to provide additional context while preserving the original intent and key information of the story
Kajal holds an MA in Journalism, Media, and Globalisation from the Ludwig Maximillian University of Munich. She has previous experience in African-focused humanitarian media and transnational newsrooms. The enduring power of words in shaping the narrative of tomorrow remains the foundation upon which she builds her career.
