The VASP Bill 2025 in Kenya has ignited debate over a proposed 3% Digital Asset Tax, which regulators believe will clarify the industry. However, critics argue it’s likely to hinder innovation and investment. Rufas Kamau from FXPesa recommends alternative taxation strategies that could support growth instead of imposing burdens on businesses operating in the blockchain space.
Kenya is poised to influence its digital asset landscape significantly with the recent discussion surrounding the Virtual Asset and Virtual Asset Service Providers (VASP) Bill 2025. This bill has generated considerable debate, particularly regarding the proposed 3% Digital Asset Tax (DAT). While regulators advocate that this bill will clarify regulations within the industry, many stakeholders caution that such a tax could suppress innovation and deter potential investments in the blockchain sector.
Rufas Kamau, Lead Market Analyst at FXPesa, articulated a critical perspective during a CNBC Africa interview, asserting that the current tax framework hampers the growth of Kenya’s blockchain ecosystem. He expressed concern that the 3% DAT might drastically reduce traders’ profits, potentially making the operation of virtual asset service providers (VASP) unfeasible in Kenya’s market environment.
Kamau suggested a shift in taxation strategy toward charging taxes based on commissions and spreads rather than a flat percentage tax. This revision could create a more equitable tax system that aligns with industry practices, fostering sustainable growth while also ensuring government revenue generation.
In navigating the complexities of the regulatory landscape, Kenya must focus on finding a middle ground that balances innovation with necessary oversight. Achieving this harmony is essential for attracting investment and advancing the country’s blockchain objectives.
The introduction of the VASP Bill 2025 marks a pivotal moment for Kenya’s digital asset economy. By addressing regulatory gaps, the bill aims to provide clear guidelines for cryptocurrency operations. However, the proposed 3% Digital Asset Tax has raised concerns among industry stakeholders, prompting discussions on its potential impact on innovation and investment in the sector, creating a challenging environment for virtual asset service providers.
In summary, the VASP Bill 2025 in Kenya presents both opportunities and challenges. While it aims to establish regulatory clarity, the proposed 3% Digital Asset Tax raises significant concerns about the possible stifling of growth and innovation in the blockchain industry. Experts like Rufas Kamau advocate for alternative tax strategies that support both the government’s revenue needs and the sustainable growth of the digital asset sector, highlighting the importance of balancing regulation and innovation.
Original Source: www.cnbcafrica.com
