- Kenyan crypto firms are worried that proposed regulations could give a Binance-linked group too much control.
- The Virtual Asset Chamber of Commerce (VAC) may join the regulatory board according to the draft law.
- Industry participants allege that VAC has received funding from Binance and may not be fully independent.
- The planned regulatory body will also include representatives from several government financial authorities, along with legal and accounting experts.
Kenyan cryptocurrency startups have raised concerns about a proposed law that could allow a group with links to Binance, a global cryptocurrency exchange, to have significant influence over future regulations. The draft Virtual Asset Service Providers (VASP) Bill would permit the inclusion of a private think tank, the Virtual Asset Chamber of Commerce (VAC), on the official regulatory board.
Disclosures cited by The Kenyan Wall Street reveal that VAC has received $6,000 per month from Binance in each country for policy advocacy, according to a confidential agreement. Some Kenyan stakeholders argue that this relationship could favor Binance while harming local competitors. One person interviewed said, “All regulation convos by VAC that happened recently have been sponsored by Binance. Then VAC, a private consulting entity, with a non-compete with Binance ‘magically’ gets a regulatory seat? How is this fair? How is this constitutional?”
Additional critics warn that appointing any group with potential conflicts of interest might keep Kenya on monitoring lists such as those from the Financial Action Task Force (FATF) and the European Union. Another industry participant stated, “If an entity of poor international reputation or one with clear conflict of interest becomes our crypto regulator, Kenya shall never leave FATF and EU greylists.” Some have also pointed out similar efforts by VAC in other countries, like Rwanda.
VAC director Basil Ogolla defended the group’s position, saying it has carried out consultations with the International Monetary Fund, the Central Bank of Kenya, and Parliament over the past two years. Ogolla said, “The National Assembly’s decision to include VAC as a nominator in the regulatory board reflects the trust and confidence built through this track record of meaningful engagement.”
The upcoming regulatory board will also feature members from the National Treasury, the Central Bank of Kenya, the Capital Markets Authority, a lawyer, and an accountant. VAC’s website does not list Binance as a partner.
Globally, Binance continues to form government partnerships. In May, it signed a memorandum with Kyrgyzstan’s National Agency for Investments for crypto payment development and blockchain education. Binance CEO Richard Teng recently said the firm is advising governments on building crypto reserves and policy strategies. In April, former CEO Changpeng Zhao became an adviser to Pakistan’s new Crypto Council.
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