President Ruto’s newly led administration is looking at exploring the huge potential of cryptocurrency in Kenya and Africa at large
In efforts to see exponential growth in her Internally Generated Revenue, IGR, Kenya Considers Tax on Crypto through policy from President Ruto’s newly led government.
This decision currently being debated by lawmakers in the East African country is coming on the heels of data from the United Nations Conference on Trade and Development, UNCTAD where it is reported that a whopping 8.5% of Kenya’s entire population owns one digital currency or the other.
As a breakdown, recall that the UNCTAD report details that 4.25 million people in Kenya own cryptocurrencies, ranking fifth in the world. This is above the ranking of the United States of America with 8.3% of its population ranking sixth.
This proposed policy is captured in the Capital Markets (Amendment) Bill 2022 sponsored by Mosop MP Abraham Kirwa and will capture beyond the general term of taxing crypto exchanges to extend to digital wallets and transactions.
Consequentially, if this bill flies through to implementation, investors in Kenya are expected to remit to the Kenya Revenue Authority, KRA the Capital Gains Tax as they make crypto transactions.
Kenya Considers Tax on Crypto: More Highlight of Move
In addition to the remittance of Capital Gains Tax to KRA, investors are also expected to update the Capital Markets Authority on information about their crypto ownership.
The policy is also expected to redefine digital currency, regulate the trading of digital currencies, and regulate the mining of cryptocurrencies.
Why is crypto Popular in Africa
Considering the lucrative nature of cryptocurrency when the market is on the rise and the easy entry without job application like a traditional job, the low-income population in Africa are embracing cryptocurrency as an easy escape from abject poverty.
The economic crisis plaguing most African nations due to high debt servicing, policy summersault and political instability are other factors for the popularity of crypto in Africa. This is more so considering inflation-ravaged countries like Nigeria, Kenya etc.
It is also important to highlight that cryptocurrency comes with a lot of inclusion which makes transactions quicker, cheaper and easier to adopt due to its peer-to-peer facility that eradicates intermediaries.
The rise and rise of cryptocurrency in Africa will imply a boom in economic activities in the continent considering the financial inclusion it brings for regions without easy access to traditional banks.
Cryptocurrency will also ensure financial transparency in the African economy as the smart contract feature will ensure the security of transactions.
Technology Powering Crypto
The different cryptocurrencies today are powered by Blockchain technology.
The ability to exchange information directly in real-time between two or more participants in a pair-to-pair network represents the kernel of blockchain technology. It eradicates the involvement of a third party or intermediary.
Technically speaking, a blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. It is made up of blocks where a block in the chain contains several transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger.
Blockchains are used across different sectors and come in three major types. These types are the Public Model which allows for open and anonymous participation, an example is Bitcoin; the Private Model which is obtainable when a party defines the rule and supervises compliance; Closed Ecosystem where each participant is identified, allowing the creation of organizations or groups for a particular purpose.
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