Virtual Asset Stakeholders Propose Comprehensive Virtual Asset Tax Reforms for Finance Bill 2025

A coalition of leading virtual asset stakeholders, led by Busha, Kotani Pay, Luno, HoneyCoin, Swypt, and DurraFx representing a wider group of blockchain and cryptocurrency players, in collaboration with PwC, today presented proposals to the National Assembly Committee on Finance and National Planning regarding the taxation of virtual assets under the Finance Bill, 2025.

The comprehensive submission captures insights from a wide range of participants in Kenya’s blockchain ecosystem—from developers and startups to multinational corporations—ensuring inclusive representation of the entire sector’s position regarding digital asset taxation and the industry’s long-term survival.

The comprehensive submission outlined three critical proposals designed to modernise Kenya’s approach to digital asset taxation:

1. Repeal of Specialised Digital Asset Tax Regime The stakeholders proposed the complete deletion of Section 12F of the Income Tax Act (ITA), which currently establishes a specialised taxation regime for digital assets.

The current framework has been problematic due to its failure to recognise losses and volatility inherent in digital assets, its disproportionately harsh treatment compared to other property forms, and the high likelihood of double taxation in digital asset transactions.

2. Integration of Digital Assets into Standard Property Tax Framework The proposal recommends amending the definition of ‘property’ under the Eighth Schedule of the ITA to include digital assets explicitly. This amendment would ensure that virtual assets are taxed under normal property disposal rules, including Capital Gains Tax and business income provisions, promoting equality and fairness across different asset classes.

3. Recognition of Virtual Asset Service Providers (VASPs) as Financial Institutions The submission advocates for including VASPs under the definition of financial institutions for both VAT and Excise Duty purposes.

This would provide tax exemptions similar to traditional financial institutions and prevent cascading VAT charges that could stifle innovation in the digital finance sector.

The stakeholder coalition represents a comprehensive cross-section of Kenya’s virtual asset ecosystem, bringing together established platforms, innovative startups, and technology builders to advocate for regulatory clarity that supports innovation while ensuring compliance.

“Technology dies or thrives on the altar of law and policy. Fundamentally, as an industry, we would prefer to be regulated in terms of the offered service and not the underlying technology,” said Keega Gakuua, Managing Partner at Keega & Co Advocates & Head of Legal at Swypt.

The international perspective was equally emphasised, with insights from operators who have navigated regulatory frameworks across Africa.

“As Nigeria’s first licensed exchange, we’ve seen how smart regulation drives crypto adoption. Kenya can lead Africa’s blockchain future with the right tax framework,” noted Chebet Kipingor, Business Operations Manager at Busha.

The presentation highlighted Kenya’s vibrant virtual asset ecosystem, which includes exchanges, wallet providers, miners, validators, and token issuers.

Virtual assets are increasingly popular among Kenyan youth aged 18-40, who use platforms like Binance, Coinbase, and Aza Finance for investment, remittances, and online transactions.

“We appreciate the ongoing efforts to regulate Virtual Asset Service Providers (VASPs) in Kenya, which are key to nurturing the local startup and developer ecosystem.

As the Silicon Savannah, Kenya is well-placed to lead responsible technology growth. We welcome continued dialogue with all stakeholders to shape a safe, innovative, and inclusive digital future together,” said Felix Macharia, CEO of Kotani Pay.