By Larry Cooke, Africa head of Legal Counsel at Binance
Kenya has taken an important step forward on digital assets. With the scrapping of the Digital Asset Tax (DAT) on all transfers initially introduced by the Finance Bill 2023, the government has shown its growing understanding of the and is willing to collaborate in shaping the crypto economy in favour of sustainable growth, inclusion and long-term revenue sustainability.
This is a win not just for the crypto sector, but for Kenya’s broader digital economy agenda. It signals a recognition that fostering innovation requires more than just policy; it requires partnership and strategic execution. We commend the leadership of Hon. CPA Kuria Kimani, CBS, and members of Kenya’s National Assembly Finance & Planning Committee for their openness to public participation from local and foreign industry stakeholders.
With revamped Finance Act 2025, the crippling DAT is no longer applicable; instead, an excise duty of 10% is applicable on the fees charged by the owner of a platform for the transfer of the digital assets. However, Kenya still has three levels of tax, namely corporate income tax, an excise duty and value added tax (VAT). In comparison to other jurisdictions on the African continent, this is still more than the likes of South Africa and Mauritius. Many stakeholders are still holding their breath in anticipation of a VAT exemption given the infancy of this industry and with the understanding that Kenya aims to attract greater foreign direct investments to continue building its ‘Silicon Savannah’.
We strongly encourage the government to consider VAT exemption on digital asset transactions, following precedent from other emerging industries. Such an exemption would support growth, incentivise voluntary taxpayer registration, and attract foreign direct investment – all of which help expand the base sustainably.
While tax considerations continue to progress, Kenya has doubled down on its efforts as it prepares for the imminent reading of the Virtual Assets and Service Providers (VASP) Bill. This is one of the most robust VASP bills in the continent, showing Kenya’s determination to get off the FATF grey list sooner rather than later. From anti-money laundering provisions, to proactive operational guidelines, to a single inclusive designated regulatory authority, to balanced enforcement actions, the VASP Bill holds both substance and form. It even contains innovative forward-thinking provisions such as license passporting, which allows regional and global players who are licensed in other recognised jurisdictions to be considered for an expedited application.
Although Kenya appears to be moving very fast in this crypto race to regulation, this has been a 2 year plus journey that Binance has been a part of, having worked with the likes of Bowmans, a prestigious law firm, on tax matters and the Virtual Asset Chamber of Commerce (VACC), an impactful local industry lobbying group, on the VASP Bill. Although these engagements have been ad hoc, we are always looking for opportunities to co-create with local stakeholders who understand the letter of the land and have a consistent track record. Through our engagements with the VACC, Binance has had the opportunity to engage with various local stakeholders and stand in solidarity on mutually beneficial stances, which in itself sends a positive signal to the relevant authority as it demonstrates the industry can self-organise.
Lessons worth learning for other jurisdictions: you can’t regulate or tax what you haven’t clearly defined. Kenya’s digital asset landscape is vast and complex. From stablecoins used in remittances to NFTs representing digital art and governance tokens in DAOs, each serves a different purpose. Where there is one-size-fits-all thinking, significant uncertainty is created. Startups can face the impossible task of calculating and remitting tax on transactions without clear definitions of what constitutes a taxable event, to stakeholders arguing amongst themselves who benefits the most, and as a result, some paused operations, while others looked offshore. The crypto community must stand together for the industry’s sake, before fragmenting into their competitive silos. Each win counts and adjustments can be made subsequently, with intelligible data.
Kenya is not alone in grappling with this. But now it has a chance to lead.
It’s also important to recognise the role crypto can play in Kenya’s Vision 2030 goals. Whether it’s powering remittances, expanding financial access, or enabling cross-border commerce, digital assets offer tools for real economic inclusion. But these tools can only be unlocked if innovators are given a predictable environment to build.
We encourage the government to continue engaging with stakeholders across the board – including platforms, legal experts, developers, and consumer groups – to ensure the VASP Bill lands well. A multi-stakeholder task force would be a useful next step.
Kenya has shown its willingness to listen. Now we can co-create a regulatory model that delivers on innovation, protects consumers, and builds a tax base rooted in clarity and fairness.
The progress so far deserves applause, but the work ahead is just as important.
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Also Read: How OTC Crypto Trading and Stablecoins Are Supporting African Businesses Amid Dollar Shortages
