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A proposed virtual asset service providers (VASP) Bill in Kenya is raising significant concerns among crypto startups. Critics fear the legislation could grant undue influence to a lobby group, the Virtual Asset Chamber of Commerce (VAC), which reportedly has strong ties to Binance, potentially stifling fair competition within the country's burgeoning digital asset sector.
Key Takeaways
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The proposed VASP Bill in Kenya includes the Virtual Asset Chamber of Commerce (VAC) on its regulatory board.
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Crypto stakeholders allege VAC lacks independence and acts as a proxy for Binance, citing Binance-sponsored regulatory talks.
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A confidential agreement reportedly shows Binance pays VAC $6,000 per country monthly for policy advocacy.
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Concerns are raised about potential conflicts of interest and the risk of Kenya remaining on FATF and EU greylists if a compromised entity regulates its crypto sector.
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VAC defends its inclusion, citing a two-year consultation track record with key financial institutions.
Allegations of Binance Influence
Disclosures seen by The Kenyan Wall Street indicate that VAC will be a part of the regulatory board established under the draft VASP Bill. This inclusion has drawn sharp criticism from some local crypto stakeholders who claim VAC has hosted Binance-sponsored regulatory discussions and lacks the necessary independence.
One stakeholder reportedly stated, "All regulation convos by VAC that happened recently have been sponsored by Binance. Then VAC, a private consulting entity, with a non-compete with Binance ‘magically’ gets a regulatory seat? How is this fair? How is this constitutional?"
Financial Ties and Conflict of Interest
The report further alleges that Binance compensates VAC $6,000 per country each month for policy advocacy, citing a confidential agreement. This financial arrangement fuels fears that VAC could manipulate Kenya's crypto regulations to favor Binance, thereby disadvantaging local players. Critics also point to similar attempts by VAC to influence regulatory processes in Rwanda.
Regulatory Board Composition and Defense
Despite the controversy, VAC's director, Basil Ogolla, has defended the organization's role, highlighting its two-year engagement with the International Monetary Fund (IMF), the Central Bank of Kenya (CBK), and Parliament. Ogolla stated that the National Assembly's decision to include VAC reflects trust built through this engagement.
The new regulatory body in Kenya is set to include diverse representation:
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National Treasury
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Central Bank of Kenya (CBK)
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Capital Markets Authority (CMA)
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A lawyer
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An accountant
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Virtual Asset Chamber of Commerce (VAC)
Binance's Global Regulatory Engagements
This development in Kenya aligns with Binance's broader strategy of deepening ties with governments worldwide. Recent examples include:
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Kyrgyzstan: In May, Binance signed a Memorandum of Understanding (MOU) with Kyrgyzstan’s National Agency for Investments to introduce crypto payment infrastructure and blockchain education.
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Global Advisory: CEO Richard Teng revealed in April that Binance is actively advising several governments on establishing strategic Bitcoin reserves and crafting crypto policies.
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Pakistan: Former CEO Changpeng Zhao was named an adviser to Pakistan’s newly launched Crypto Council in April, overseeing the country’s blockchain and digital asset initiatives.
Sources
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Kenya’s VASP Bill Sparks Fears of Binance-Backed Monopoly, Cointelegraph.
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