Crypto enthusiasts in Kenya mobilize to advocate against proposed tax on digital assets
In a significant victory for the Kenyan cryptocurrency sector, the industry has successfully lobbied against a proposed 3% digital asset tax, which was viewed as discriminatory and detrimental to sector growth.
The Virtual Assets Chamber of Commerce (VACC) played a leading role in coordinating lobbying activities, working closely with local virtual asset service providers (VASPs) and partnering with PwC to advocate for a more favourable tax regime. A coalition including notable crypto companies like Busha, Swypt, Kotani Pay, and Luno engaged legislators to urge regulatory frameworks based on services provided rather than on the underlying crypto technology.
Industry players argued that taxing every transaction at 3% was akin to being taxed for depositing money in a bank, which was seen as unfair and detrimental to crypto adoption. The lobbying efforts emphasized classifying digital assets as property and regulating virtual asset service providers as financial institutions, seeking to align crypto regulation with existing financial regulatory frameworks.
The Kenyan parliament responded by repealing the 3% digital asset tax entirely. Instead, they introduced a 10% excise duty on transaction fees charged by exchanges and wallets, which is a significantly lower cost burden for users and expected to encourage broader adoption of cryptocurrencies.
This repeal was formalized in the 2025 Finance Bill, which was signed into law by President William Ruto in June 2025. The Finance and National Planning Committee in parliament, represented by MP Kuria Kimani, acknowledged the industry's concerns and explained the shift from taxing transaction amounts to taxing transaction fees, which lowers the tax impact on crypto users.
The industry has concerns about regulatory capture by large foreign crypto firms like Binance, with local startups warning that industry giants could skew regulations in their favour. The VACC has defended its independence to avoid such conflicts of interest, ensuring the lobbying represents mainly Kenyan startups.
The success of this lobbying effort has also sparked interest in non-dollar stablecoins, with global players like Ethena partnering with TON to offer a USD stablecoin on Telegram, and Onafriq partnering with Circle to power low-cost cross-border transactions using USDC.
In addition, the Kenyan cryptocurrency industry is planning further lobbying efforts, with a coalition of companies teaming up to oppose any future burdensome taxes or regulations. They plan to hire a major tax consultancy like PwC to support their arguments and have launched a fundraising campaign targeting crypto businesses across Kenya.
The KDX, Kenya's digital exchange, is built on the Hedera network and is a testament to the industry's commitment to digital transformation and growth. As competition intensifies, stablecoins like PYUSD, launched by PayPal in August 2023, are gaining traction, with a market cap of $887 million and ranking sixth among stablecoins.
This article is based on factual bullet points and aims to provide a clear, easy-to-read account of the Kenyan cryptocurrency industry's successful lobbying efforts against the burdensome digital asset tax.
- The Virtual Assets Chamber of Commerce (VACC) led lobbying efforts against a proposed 3% digital asset tax in Kenya, collaborating with local virtual asset service providers (VASPs) and PwC.
- A coalition of crypto companies, such as Busha, Swypt, Kotani Pay, and Luno, worked with legislators to advocate for a more favorable tax regime based on services provided rather than crypto technology.
- Industry players opposed taxing every transaction at 3%, likening it to being taxed for depositing money in a bank, which they considered unfair and detrimental to crypto adoption.
- The Kenyan parliament repealed the 3% digital asset tax and introduced a 10% excise duty on transaction fees instead, lowering the cost burden for users and encouraging crypto adoption.
- This repeal was formalized in the 2025 Finance Bill, which was signed into law by President William Ruto in June 2025.
- The industry is concerned about regulatory capture by large foreign crypto firms like Binance, and local startups seek to ensure the lobbying represents mainly Kenyan startups.
- The success of the lobbying effort has sparked interest in non-dollar stablecoins, with global players like Ethena and Onafriq partnering with TON and Circle to offer stablecoins and power low-cost cross-border transactions.
- The Kenyan cryptocurrency industry is planning further lobbying efforts to oppose any future burdensome taxes or regulations, hiring a major tax consultancy like PwC to support their arguments and launching a fundraising campaign targeting crypto businesses across Kenya.
