In recent developments, Kenya’s vibrant crypto startup scene is expressing growing concerns regarding a potential monopoly, as ties between Binance and a proposed lobby group have been revealed. This lobby group, the Virtual Asset Chamber of Commerce (VAC), is set to have a significant role in shaping the country’s forthcoming Virtual Asset Service Providers (VASP) bill, which some believe could unduly favor Binance.
Stakeholders within the Kenyan crypto landscape are particularly troubled by suggestions that VAC, which has allegedly held discussions sponsored by Binance, may lack the necessary independence to represent the diverse interests of the industry fairly. One local stakeholder raised critical questions, asking, “How is it fair that a private consulting entity with a non-compete agreement with Binance receives a regulatory seat?”
The controversy does not stop there; reports indicate that Binance contributes approximately $6,000 per month to VAC for policy advocacy, leading to fears that this financial backing could translate into a regulatory framework tailored to benefit Binance at the expense of local competitors. VAC has faced scrutiny not only for its relationship with Binance but also for its attempts to influence regulatory practices in neighboring countries, notably Rwanda.
Another stakeholder expressed grave concerns about the implications of having an entity with potential conflicts of interest in a governance role, stating, “If our crypto regulator is linked to an organization with such a reputation, it will jeopardize Kenya’s standing with international financial bodies like FATF and the EU.”
In response, VAC’s director, Basil Ogolla, defended the organization’s impact, highlighting its extensive engagement with the International Monetary Fund (IMF) and various government bodies over the past two years. He asserts that this history of collaboration has established the trust necessary for VAC to be included in the regulatory framework.
As the situation unfolds, Kenya’s new regulatory body will also incorporate representatives from essential institutions, including the Central Bank of Kenya (CBK) and the National Treasury. Such a diverse representation aims to foster robust discussions and equitable regulations in the growing crypto market.
Binance’s growing influence in various jurisdictions has raised alarms globally, prompting interest in how these developments in Kenya might mirror similar engagements in other countries where the exchange seeks to establish or enhance its operational framework.
