Kenya’s VASP Bill 2025: A step forward or a major setback for the industry?

Kenya is at a critical juncture as it looks to shape its digital asset economy with the recent public participation on the Virtual Asset and Virtual Asset Service Providers (VASP) Bill 2025 sparking intense debate, particularly over the proposed 3 per cent Digital Asset Tax (DAT). While regulators argue that the bill will bring much-needed clarity to the industry, stakeholders are concerned that the tax could hinder innovation and deter investment. The question looms large - is this a step forward or a significant setback for Kenya's blockchain aspirations? Rufas Kamau, Lead Market Analyst at FXPesa, shared his insights on the matter during an interview with CNBC Africa. Kamau expressed his reservations about the current tax regulation in place, noting that it has acted as a major deterrent to the growth of the blockchain ecosystem in Kenya. He highlighted the impracticality of the 3 per cent digital asset tax, emphasizing that it is unsustainable for businesses and individuals operating in the industry. Kamau pointed out that the tax could potentially wipe out any profits made by traders, rendering it nearly impossible to conduct business under such conditions. He urged regulators to reconsider the tax structure and align it with industry standards to promote sustainable growth and development.While discussing potential alternatives to the current tax framework, Kamau suggested that taxing the commissions and spreads charged by virtual asset service providers would be a more viable option. By adopting a tax structure that mirrors industry practices, regulators could strike a balance between generating revenue for the government and fostering a conducive environment for industry players and investors. This approach, Kamau argued, would ensure transparency, support growth, and provide essential protections for investors and customers within the sector. As Kenya navigates the complexities of regulating its digital asset economy, finding a middle ground that promotes innovation, attracts investment, and upholds industry standards will be crucial for realizing the country's blockchain potential.