The CA of Kenya is proposing a regulatory sandbox to support the development of emerging technologies in Kenya, with an aim to discover innovative applications and support their development.
The Communications Authority of Kenya (CA) considers establishing a regulatory sandbox to support the development of emerging technologies. The authority, which is responsible for regulating the ICT industry in Kenya, sent out a tweet inviting comments from the public as it seeks to create a framework for the sandbox.
The Authority’s scope concerning the regulatory sandbox is not clear. However, it will focus on emerging technologies that pose both opportunities and challenges to the ICT sector.
Why would an ICT administrator require a regulatory sandbox?
A regulatory sandbox tailors to provide leeway for limited-scale, live testing of innovative products, solutions, and services. The sandbox would help nurture and support innovation by exploring the application of innovative regulatory solutions.
There are already two regulatory sandboxes in Kenya: the Central Bank of Kenya (CBK) and the Capital Markets Authority of Kenya (CMA) regulatory sandboxes.
The CMA runs a regulatory sandbox with a focus on leveraging technology to deepen the product offering in the capital markets. This includes stock markets, bond markets, and forex markets. Participants admitted into the regulatory sandbox can test their innovations for a maximum of 12 months.
Is Kenya preparing for a crypto regulatory framework?
The Kenyan authorities are of late exploring regulations revolving around crypto actively. In November 2022, The Capital Markets (Amendment) Bill 2022 proposed the imposition of taxes on crypto exchanges and digital wallets. If passed, taxes on digital currencies will stand in line with the current excise duty for bank transactions, which is 20% on all transaction fees and commissions.
MP Abraham Kirwa proposed the bill soon after a UNCTAD report revealed that Kenya has 8.5% of its population as crypto holders. With this figure, Kenya ranks higher than many developed countries such as the United States.
Following this report, UNCTAD suggested mandatory regulations and tax sanctions for the crypto industry in order to make it less appealing.
The following month in December the Central Bank of Kenya advocated for a regulatory framework for crypto. The bank suggested the creation of a technical committee that will develop laws to govern crypto.
These regulations will impact both digital assets and businesses operating within the crypto sector. The Central Bank of Kenya has also established a joint task force to provide advice to the Treasury CS on the regulation of crypto.
Could the Kenyan authorities be working to establish regulations for emerging technologies, particularly in the field of cryptocurrency? If so, this would ensure that the crypto industry operates within legal boundaries and provide a balance between innovation and safety.
