Kenyan cryptocurrency enthusiasts intensify advocacy efforts against proposed tax legislation
In a significant turn of events, the proposed 3% Digital Asset Tax (DAT) in Kenya has been withdrawn, marking a victory for the country's virtual asset service providers (VASPs). This development follows intense lobbying by VASPs, led by the Virtual Assets Chamber of Commerce (VACC), and other industry stakeholders.
The proposed tax, announced by the Kenyan government in 2023, had raised concerns among VASPs who believed it posed a threat to the survival of crypto businesses. The tax, which was to be deducted without regard for profit, loss, or the simple transfer of assets, was met with resistance from the start.
The VACC, along with affiliates of Kenyan cryptocurrency companies such as Busha, Swypt, Kotani Pay, and Luno, launched a coordinated lobbying effort. This included constitutional litigation, legislative engagement, and consultations with regulatory bodies like the International Monetary Fund (IMF) and the Central Bank of Kenya (CBK).
Thanks to these efforts, the Kenyan parliament’s finance committee removed the 3% transaction tax provision from the 2025 Finance Bill, which was then signed into law by President William Ruto in June 2025. In its place, a new 10% excise duty on transaction fees charged by exchanges and wallets was introduced, which is based on fees rather than the transaction amounts themselves. This change aligns digital asset taxation with that of conventional financial services and reduces trading costs.
Furthermore, the VACC has played a central role in shaping the broader regulatory framework. Over 90% of their proposed policies were adopted in the Virtual Asset Service Providers Bill, 2025, which sets out licensing, consumer protection, and anti-money laundering rules for the sector. The CBK and Kenya’s Capital Markets Authority (CMA) will jointly oversee the industry under this bill, signaling a more structured regulatory environment.
The industry is also organizing further advocacy via a planned Kenyan Digital Assets Association to maintain favorable policy development. These developments mark a significant victory for Kenyan VASPs and demonstrate their growing influence on national crypto regulatory policy.
It is important to note that Kenya failed to meet the IMF's requirement to increase its tax revenue to qualify for the next tranche of funding, and as a result, did not pass the IMF's review, which was crucial for securing an $850 million disbursement. This could have potentially impacted the proposed Digital Asset Tax. However, Kenya then canceled its previous deal with the IMF in favor of a new arrangement.
The story about Kenyan cryptocurrency companies and the proposed digital asset tax has been updated to reflect the clarification. The earlier statement that Kenyan crypto firms are launching legal action against the proposed Digital Asset Tax is incorrect. The response from Kenyan cryptocurrency companies to the proposed digital asset tax is not a legal action, but a lobbying effort.
[1] "Kenya Cancels IMF Deal, Plans New Arrangement." Reuters, 2024. [2] "Kenya’s Crypto Industry Wins Battle Against Digital Asset Tax." Cointelegraph, 2025. [3] "Virtual Asset Service Providers Bill, 2025." Parliament of Kenya, 2025. [4] "Kenya's Crypto Industry Lobbies for Regulatory Clarity." CoinDesk, 2024.
- The withdrawal of the 3% Digital Asset Tax (DAT) in Kenya has resulted in a victory for the country's virtual asset service providers (VASPs), alleviating concerns about its potential impact on crypto businesses.
- Through intense lobbying efforts led by the Virtual Assets Chamber of Commerce (VACC) and other industry stakeholders, the proposed tax, which had raised concerns among VASPs, was removed from the 2025 Finance Bill.
- In place of the withdrawn tax, a new 10% excise duty on transaction fees charged by exchanges and wallets was introduced, aligning digital asset taxation with traditional financial services and reducing trading costs.
- Kenyan VASPs are not only celebrating this victory but are also taking the lead in shaping the broader regulatory framework for the industry, with over 90% of their proposed policies being adopted in the Virtual Asset Service Providers Bill, 2025.
- The Central Bank of Kenya (CBK) and Kenya’s Capital Markets Authority (CMA) will jointly oversee the industry under this bill, signaling a more structured regulatory environment.
- As the influence of Kenyan VASPs on national crypto regulatory policy continues to grow, the sector is now planning to establish a Kenyan Digital Assets Association for further advocacy and policy development in the digital assets space.
