What to know:
- Kenya denied plans to tax crypto holdings, saying the bill targets reporting rules.
- The Finance Bill proposes 10% duty on crypto service fees and high licensing costs for firms.
- Binance account freezes add pressure as traders demand clearer crypto tax rules in Kenya.
Kenya’s Treasury has denied reports that the Finance Bill 2026 creates a new crypto tax on digital asset holdings. Treasury Cabinet Secretary John Mbadi said the plan targets reporting, record-keeping, and compliance in Kenya’s growing virtual asset sector, not balances.
According to the local report, the issue was raised by Mbadi on Monday following public concern over the bill. His clarification comes amid protests in Nairobi and other towns over taxes, digital payments, and crypto trading.
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Treasury Says Crypto Tax Focuses on Reporting Rules
The Treasury released infographics to explain the proposed measures. The government is interested in closing regulatory loopholes in digital asset transactions while maintaining fairness in taxation, Mbadi said.
The proposal aims to carry out the principles of reporting and recording, he said. He responded to claims that the state is planning a crypto tax on user balances.
However, the Finance Bill includes a crypto tax measure for exchanges. It suggests that a 10% excise duty be imposed on fees collected by Virtual Asset Service Providers.
The responsibility would be limited to services charges, not to customers’ holdings. However, if the measure is enacted into law, digital asset companies may incur increased expenses.
The 10% charge would be a step up from the existing 5% tax on betting companies. That comparison has raised the alarm among crypto companies.
Kenya Crypto Rules Could Raise Costs for Exchanges
The bill further recommends a KSh 150 million licensing fee to be paid by digital asset firms before they start offering services. Companies would also be charged KSh 2 million per annum in renewal fees.
Customer and transaction data would be reported annually to the Kenya Revenue Authority by the crypto exchanges. The rule is part of a broader initiative to regulate digital asset activity.
Industry analysts noted that the crypto tax regime and licensing fees could make Kenya a less appealing place to do business. Other companies may opt for local markets that require less investment.
The suggested regulations have also sparked worry throughout the fintech market. Extra compliance costs may be imposed on the user via increased service fees by banks and payment processors.
This might also increase the costs of digital payments, remittances, and online transactions. When providers increase charges, consumers and small businesses can feel the impact.
Binance Account Freezes Add Pressure in Kenya
Meanwhile, Binance’s crypto accounts are frozen in Kenya, and the company is facing criticism for the move. The exchange limited various accounts on the basis of requests from the Directorate of Criminal Investigations.
Traders reported not receiving charges, court orders, or time lines. One affected user reported that the complainant was not identified, charges were not identified, and there was no timeline.
Binance has allegedly advised customers to reach out to the Kenyan police authorities. The exchange intends to have a discussion with the AML Association of Kenya (AML Kenya) in X Spaces.
Comedian Eddie Butita said the session will include discussing compliance issues and frozen accounts. The matter has been adding fuel to the controversy over crypto tax in Kenya, with traders calling for more definitive crypto tax regulations.
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