In Kenya, upcoming legislation regards digital currencies as securities.

Kenya's parliament is now debating new legislation that would classify the asset class as securities, which might have a significant impact on the status of digital currencies in the country.

The news was first announced on Twitter by Kenyan journalist Julians Amboko, who noted that although the law is merely an amendment to the Capital Markets Act, it would have substantial implications for digital currency. Key words including "blockchain," "crypto mining," and "digital currency" were defined in the measure, which also expanded the definition of "securities" to encompass digital assets.

The legislation gives the Kenyan Capital Markets Authority (CMA) the authority to oversee digital currencies, including by issuing and approving licenses for service providers. A screenshot of the bill revealed that the CMA must be satisfied that the assets underwent product development for at least 24 months with a user base of at least 10,000 before the CMA will allow the introduction of digital currencies to the Kenyan market.

Companies that want to participate in Kenya's digital currency ecosystem must register with the CMA, maintain accurate records of all transactions linked to the sector, and provide accurate disclosures to the regulator. The disclosures include the type of digital asset, the date of the transaction, the value of digital assets sold in Kenyan Shillings, and any additional fees.

Initial drafts of the proposed law give industry participants six months to apply for registration before the law takes effect. Also required by the measure is that the CMA maintain a "centralized electronic register of all transactions in digital currencies."

According to the bill, if digital currencies are stored for less than 12 months, Kenyan income tax laws will apply, and if they are retained for more than 12 months, capital gains tax will be applied.

Since December 2022, the Joint Financial Sector Regulators, a group of top Kenyan financial regulators, have pushed for thorough regulation of digital currencies. The focus of the regulators' 13th annual meeting was on digital currency, according to a statement, which prepared the ground for additional legislative action.

Securities and cryptocurrencies.

Countries are choosing to regard the asset class as securities in an effort to maintain a firm grip over the markets for digital assets. With a new law that provides the country's securities regulator greater control over digital assets, Indonesia broke the ice by moving away from treating these assets as commodities.

Due to their compliance with the Howey's test, numerous digital currencies have been designated as securities by the SEC in the United States. However, the designation has caused a stir among industry players, sparking a string of legal disputes and the exodus of digital asset companies from the United States.

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