The blueprint of Kenya’s Blockchain Association is etched on the drawing board
|Published
By Andile Masuku
In last week’s column, I referenced the regulatory challenges the world’s largest crypto exchange, Binance, is currently experiencing in Nigeria.
Shortly after my reflections were published, news broke of Binance announcing that Naira deposits would cease after March 5, followed by the termination of withdrawal services on March 8. The company reportedly indicated that users with remaining Naira (NGN) balances in their Binance accounts would have them automatically converted to Tether (USDT) after that date.
What is Tether
Tether (USDT) is a type of cryptocurrency known as a stablecoin. It is designed to maintain a stable value by being pegged to fiat currencies like the US dollar. Each USDT token is supposed to be backed by one dollar held in reserve by the issuing company, Tether Limited. This stability makes USDT useful for traders and investors who want to hold a cryptocurrency with minimal price volatility.
According to Investopedia, as of March 2024, Tether became the third-largest cryptocurrency after Bitcoin (BTC) and Ethereum (ETH) and the largest stablecoin in the world with a market capitalisation of nearly $99 billion (R1.9 trillion). USDT is one of the most popular stablecoins in African markets like Nigeria and Kenya, where peer-to-peer (P2P) markets thrive.
Blockchain Association of Kenya
Meanwhile, following industry consultations in Kenya, the Blockchain Association of Kenya (BAK) has delivered on a parliamentary mandate to draft a policy for regulating digital assets in that country.
Meet Michael Kimani
I caught up with BAK director Michael Kimani shortly after the submission was made for the low-low on this momentous development. Kimani is also co-founder and the head of growth at Fonbnk, a fintech startup leveraging blockchain tech to enable the conversion of mobile airtime into digital money.
Happily, Kimani’s agreed to hijack my column this week and lift the curtain on the way kungakhona in his busy blockchain life.
Kimani’s insights. In his words:
Kimani said: “In 2017, with the invaluable support of my lawyer friend, Harry Karanja, I formally registered the Blockchain BAK as a non-profit member organisation under the Societies Act of Kenya. Between then and 2020, the BAK blossomed into one of the most prominent community groups in East Africa. And through five years of dedicated effort, we cultivated over a hundred micro-influencers, each individually contributing to educating and engaging a network in the thousands.
Hacking a commercial career in ‘Blockchain Africa’
I resumed active participation in the BAK in January 2023 after a 14-month hiatus to focus on building a livelihood in blockchain tech. During my time away from the association, my commercial career path in the blockchain scene led me to engage in varied capacities with several entities. Initially, I collaborated with Stellar, a blockchain network specialising in payments and tokenisation.
Subsequently, I worked with the venture capital (VC) firm DFS Labs, Koko Networks, a climate tech company, and the early-stage tech investor Founders Factory Africa. Most recently, I assumed the role of co-founder and head of growth at Fonbnk, a blockchain-based fintech startup.
All this commercial experience, particularly at Fonbank, has given me valuable insight into the commercial potential of Africa’s blockchain industry.
Community collaboration to safeguard ‘Blockchain Africa’
As far back as 2014, I was fortunate to be party to efforts by crypto startups like Bitpesa and KipochiPay to set up and run a non-profit entity to manage the issues jointly facing crypto businesses launching in the Kenyan market at the time.
Back then, let me tell you, the crypto realm was like the Wild West. It was a realm where explaining the basics felt like translating ancient hieroglyphics. And don't even get me started on the controversies; they were as numerous. For your average Jaramogi, the fear of losing hard-earned cash was enough to send them running for the hills. And to top it off, governments weren't exactly throwing welcome parties for this disruptive force.
Upon rejoining the BAK in January 2023, I delivered an urgent call to arms, highlighting a need for a proactive Kenyan blockchain community response to the storms the industry was weathering following the collapse of FTX, a significant crypto exchange. Companies were folding, lay-offs were rampant, and trust in the industry was waning.
It became evident that while international blockchain business people showed interest in Africa, policy and regulation remained a looming uncertainty. Fines imposed by the US Securities and Exchange Commission (SEC) and regulatory actions in China and Singapore underscored this shared apprehension. The time was ripe for us to continue the BAK’s work in earnest.
Together, the BAK community forged a 12-month growth plan with a policy focus that we coined the Digital Assets Policy Safari. Soon after, we launched community forums in the first quarter of 2023, hosting town halls to engage stakeholders while extending digital engagement through platforms like Twitter (now X) Spaces.
Engaging Kenyan lawmakers
In just four months of live ecosystem engagement, our association had begun to regain its standing in the ecosystem. We notably took a stand against a 3% digital asset tax on the income derived from the transfer or exchange of digital assets proposed by the Kenyan government, registering our opposition with the National Assembly’s Departmental Committee on Finance and National Planning. Despite our efforts, the tax was passed, but we pushed on.
In September 2023, we undertook legal action, filing a petition against the government in the high court - a battle still awaiting resolution. Following this, we convened a pivotal Digital Assets Policy Safari workshop in Nairobi.
A month later, the BAK’s Legal and Policy Director, Allan Kakai, made a compelling case to the National Assembly’s Departmental Committee on Finance and National Planning, advocating for a comprehensive policy framework on digital assets. Our persistence paid off as we secured a mandate to draft a national bill.
Forming a dedicated BAK subcommittee comprising various stakeholders, we enlisted our community to crowdfund resources to assemble a team tasked with drafting the bill.
Last week, I proudly submitted the Virtual Asset Service Provider (VASP) draft bill to the National Clerk at the National Assembly on behalf of the BAK, etching a significant chapter in Kenya's legislative history.
With this milestone achieved, I finally feel the weight lifted off my shoulders. As I take the next few months to rest and recharge, I've already started envisioning the expansion blueprint for the Blockchain Association of Kenya 3.0. Aluta continua!,” Kimani said.
Andile Masuku is the co-founder and executive producer at African Tech Roundup and head of community at Africa-focused early-stage tech investor Founders Factory Africa. Connect and engage with Andile on X and via LinkedIn.
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