Kenya appoints Marathon Digital as advisor on cryptocurrency regime and mining energy needs

Last updated: May 6, 2024 6:49 pm EDT | 2 minute read

Kenyan President William Ruto announced a major policy shift in the country’s approach to cryptocurrencies on May 3, revealing that his government has appointed US-based Bitcoin mining company Marathon Digital as an advisor.

The move marks a departure from the previously defiant stance of the Central Bank of Kenya (CBK) and other government bodies on cryptocurrencies.

Marathon Digital will collaborate with the government of Kenya

The announcement has been made during the AMCHAM Business Summitwhich was attended by prominent figures such as US Commerce Secretary Gina Raimondo and Kenyan Trade and Investment Cabinet Secretary Rebecca Miano.

President Ruto explained that Marathon Digital will work with the National Treasury and the Ministry of Energy to address the issue energy needs associated with cryptocurrency mining.

“Marathon Digital has been mandated to consult the Treasury on the cryptocurrency regime and the Ministry of Energy to discuss energy needs in relation to cryptocurrency mining,” President Ruto said during the meeting with American investors.

Ruto’s decision departs from the previous cautious stance on cryptocurrencies taken by institutions such as the CBK under former governor Patrick Njoroge. Njoroge had strongly warned against involving cryptocurrencies, suggesting that considering Bitcoin as a reserve asset would be absurd. He also stated that he would have been imprisoned if such a proposal had been considered.

Since Njoroge’s tenure, Kenyan authorities have shown a willingness to explore regulation of cryptocurrencies rather than an outright ban. Collaborative efforts have been initiated with organizations such as the Kenyan Blockchain Association to develop regulatory frameworks. The current government has also appointed a working group to develop a comprehensive regulatory and monitoring framework for virtual asset service providers.

Kenya makes great strides towards regulating cryptocurrencies

Kenya’s cryptocurrency adoption momentum culminated in December 2023 when Kenya’s National Assembly committee passed the Capital Markets Act. If passed into law, this bill would introduce taxation on cryptocurrency exchanges and wallets, mirroring the tax framework applied to traditional banking transactions.

On April 23, NTV Kenya reported the creation of a multi-agency working group charged with developing rules and oversight for cryptocurrencies, also known as virtual assets, and the entities that deal with them, such as virtual asset service providers.

Prof. Njuguna Ndung’u, Cabinet Secretary to the National Treasury of Kenya, revealed the formation of this group at the National Assembly. He cited concerns raised by regulators about unlicensed virtual asset products and the findings of a Central Bank risk assessment. This evaluation highlighted the money laundering risks and terrorist financing associated with virtual assets.

Kenya’s 2022 Anti-Money Laundering Report further highlighted the need for regulatory measures, identifying virtual assets and virtual asset service providers as areas requiring attention. Furthermore, the Kenyan authorities have discovered suspicious M-Pesa withdrawals totaling at least $20 million in 2023, tied to the now-suspended Worldcoin iris scanning project.

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