Key Takeaways
- According to the proposed law, VAC will be included as a nominating body on the regulatory board.
- They argue that recent policy events held by VAC were funded by Binance, and that the organization should not be awarded a regulatory role.
Several crypto startups in Kenya are raising concerns over a provision in the country’s proposed Virtual Asset Service Providers (VASP) Bill that would give a Binance-linked organization, the Virtual Asset Chamber of Commerce (VAC), a formal role in the regulatory body overseeing digital assets. The startups argue this move could distort fair competition and give one company undue influence over national crypto policy.
According to The Kenyan Wall Street report, which included a review of a confidential agreement between Binance and VAC, the deal outlines a paid policy retainer of $6,000 per country per month. In return, VAC will be reportedly committing to carrying out policy advocacy, engaging with regulators, drafting regulatory frameworks, and providing Binance with regular updates on these activities.
Startups have criticized this arrangement, saying it undermines the independence of VAC and allows a single private entity to shape public crypto policy in ways that may benefit Binance at the expense of the wider ecosystem. They argue that recent policy events held by VAC were funded by Binance, and that the organization should not be awarded a regulatory role.
According to the proposed law, VAC will be included as a nominating body on the regulatory board. The same board will also include representatives from the Central Bank of Kenya, the Capital Markets Authority, the National Treasury, and two professionals—one lawyer and one accountant.
The same VAC strategy was reportedly used in Rwanda, where local startups said the group tried to insert itself into the policymaking process with backing from Binance. “If an entity of poor international reputation or one with clear conflict of interest becomes our crypto regulator, Kenya shall never leave FATF and EU greylists,” a stakeholder warned.
VAC Director Basil Ogolla defended the group’s inclusion, pointing to its two-year engagement with the IMF, CBK, and Parliament. “The National Assembly’s decision to include VAC as a nominator in the regulatory board reflects the trust and confidence built through this track record of meaningful engagement,” Ogolla said in a statement to The Kenyan Wall Street.
The bill is currently under consideration by lawmakers and has not yet been passed.
