Kenya’s proposed Virtual Asset Service Providers (VASP) Bill 2025, introducing a 3% Digital Asset Tax on cryptocurrency transactions, faces criticism for potentially hindering Bitcoin adoption, particularly within informal settlements where it serves as a vital financial inclusion tool.
Concerns highlight that the tax could deter local trading volumes and incentivize Kenyans to utilize unregulated offshore platforms, replicating trends seen in countries like India and Indonesia where high crypto taxes led to similar outcomes.
Bitcoin has seen significant traction in settlements like Nairobi’s Kibera community. Residents and merchants value its speed, low transaction costs, and security advantages over traditional payment systems such as M-Pesa.
Experts warn the 3% levy, while aiming to regulate the sector, risks stifling innovation and undermining financial inclusion efforts. It may disproportionately impact underserved populations reliant on crypto and push activity towards less transparent peer-to-peer channels.