Why crypto traders reject Treasury’s new tax, CEO hiring proposals

Treasury notes that virtual assets have gained traction in the country due to the public’s desire for alternative investment options.

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Traders and businesses in the crypto industry in Kenya have rejected several proposals by the National Treasury, including a plan to tax virtual asset transactions and to make companies in the sector seek regulatory approval to appoint chief executives.

In its submissions to Treasury on the proposed Virtual Assets Service Providers Bill, 2025, the Virtual Assets Chamber of Commerce said the proposals were impractical and the ministry should reconsider the tax and allow companies to hire and fire their executives at will.

Allan Kakai, a director at the crypto lobby, told Business Daily that the proposed three percent tax on the value of transactions was prohibitive for the sector and would restrict its growth and scare away investors.

“We have a problem both with how the tax is structured and the rate. Three percent is too high. Traders make like one percent on a trade, it’s impractical to pay three percent in taxes,” said Mr Kakai.

“And taxing the transfer amount is not consistent with the concept of the income tax. The government should instead tax transfer fees or the gains realised after transfer. In the banking sector or securities markets, this is how it’s done.”

The lobby also wants the proposed requirement for regulators to vet CEOs before appointment scrapped, saying it risks taking the opportunities away from those most qualified and handing them to people with no real experience in the crypto industry.

“Crypto industry has not been a conventional sector for a long time, so the experience people have in this industry may not be formal, locking them out of such positions,” Mr Kakai argued.

Additionally, the lobby wants the Treasury to reduce “overly harsh penalties.” The current proposal is for a fine of up to Sh30 million and a prison time not exceeding 10 years for violations of the provisions of the Bill once it becomes law.

The crypto industry players are also opposed to the proposal to limit directors to serving on only one virtual asset company at a time, which they say will limit innovation and discourage investment in the industry.

“Allow directors to serve on multiple boards but require at least two natural persons on a licensee’s board. This will ensure startups don’t miss out on crucial funding opportunities from VCs (venture capitalists),” said the Virtual Assets Chamber of Commerce in its recommendations to the Treasury.

The Treasury, which drafted the VASP Bill, completed public participation on the proposed law last Wednesday and is now reviewing the proposals before the Bill is sent to Parliament for consideration.

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