Author: Staff

Legislation to regulate the cryptocurrency industry is being drafted by the House Agricultural Committee (HAC) and House Financial Services Committee (HFSC) of the United States. In six to eight weeks, following the joint public hearing beginning in May 2023, U.S. lawmakers may finally produce clear crypto regulations after months of obscurity. Rep. Partick McHenry (R-N.C.) is the chairman of the HFSC. 

Representatives addressed the audience at the Consensus 2023 event. McHenry responded “Yes” when asked if there was a chance that President Joe Biden would sign the legislation. Along with current issues, the proposed bill will cover the full spectrum of the commodities and securities markets. 

The Senate’s Crypto Queen, Senator Cynthia Lummis (R-Wyo), who was a panelist as well, expressed excitement about working with McHenry to coordinate efforts. She continued by saying that the House has a better chance than the Senate of passing the legislation, giving the House the upper hand in this situation. The chances in the Senate would significantly increase if the House took action first. 

Lummis also said that “This is a bipartisan subject we need to address before the 2024 election.” 

However, the US Congress has not yet produced comprehensive legislation for the cryptocurrency industry despite numerous bills making their way to Capitol Hill. 

For a second attempt at introducing stablecoin legislation in April 2023, the Republicans on the HFSC worked to secure bipartisan support. However, it is still unclear whether the support will be provided or not. Additionally, the Republicans unveiled a discussion draft, which establishes a new foundation for talks with the Democrats. 

The “Responsible Financial Innovation Act” was first presented by Lummis in 2022. This was developed in cooperation with Sen. Kirsten Gillibrand (D-N.Y.) and aimed at developing a regulatory framework for the sector. The new and improved version of the bill will be unveiled in six to eight weeks, the Crypto Queen told the audience at Consensus 2023. National security and cybercrime issues will be given more attention in the bill. 

A bipartisan bill to study the use of cryptocurrencies for illegal activities like drug trafficking, funding terrorism, and money laundering was reintroduced on April 27, 2023, by Senators Kirsten Gillibrand and Ted Budd, along with Congressmen Zach Nunn and Jim Himes. Also, providing steps to counter such usage.

The High Court in Uganda recently dismissed an application that sought to upend the central bank directive that bars cryptocurrency transactions. 

In his ruling, the court’s Justice Musa Ssekaana insisted that the Bank of Uganda (BOU)’s April 2022 directive does not infringe on individual property rights. Instead, the directive is an attempt by the central bank not to legalize the undefined system as a payment instrument in Uganda.

As previously reported in May 2022, the BOU warned parties disregarding its directive that it will not hesitate to invoke its powers under Section 13(l) (b) & (f) of the National Payments System Act, 2020 for any licensees that will be found in breach of the above directive.

Immediately after the directive was issued, Silver Kayondo, a Partner at Ortus Advocates and a Ugandan crypto trader, sought redress via the High Court. In addition to having the court declare cryptocurrencies legitimate digital assets. 

Silver also wanted the court to set aside the central bank’s directive.

However, in ruling against Kayondo’s application, Justice Ssekaana said the BOU acted appropriately when it issued the directive.

Justice Ssekaana remarked, “The applicant cannot make a claim for legitimate expectation merely because the public statement did not outlaw the same. The statement did not promise to the applicant or other stakeholders that cryptocurrencies would be allowed in Uganda or would never be regulated. Legitimate expectation relates to a promise in relation to an existing situation which will continue, or to a future benefit, advantage or course of action which the authority will follow.”

The judge also noted that the BOU directive clearly states Uganda’s position with respect to cryptocurrencies and that the context cannot be distorted to infer any benefit or promise of legality. He also ordered each party to bear the costs of bringing the matter before the courts.

According to a Kenyan media report, Kenya will start taxing cryptocurrency exchanges for commissions they receive from the over four million people dealing in digital currencies in the country if fresh regulations are adopted.

The new regulations guiding the payment of the digital service tax require platforms that facilitate the buying and selling of cryptocurrencies and other digital assets to pay a 1.5 percent duty.

“For the purposes of these regulations, a taxable electronic, Internet or digital marketplace supply include, facilitation of online payment for, exchange or transfer of digital assets excluding services exempted under the Act,” stated the Value added Tax (Electronic, Internet and Digital Marketplace Supply) Regulations, 2023 published by Treasury Cabinet Secretary Njuguna Ndung’u.

Kenya introduced a 1.5 percent digital service tax in January 2021, which aimed to curb tax avoidance by some multinational companies. The tax applies to a wide range of digital services, including online marketplaces, streaming services, and mobile money transactions.

However, in April 2023, Kenyan President William Ruto informed investors that Kenya would do away with the 1.5% tax on digital services that was levied against multinational corporations operating locally and instead adopt the Organization for Economic Cooperation and Development’s (OECD) 2024 global framework on taxing multinational corporations.

Online exchanges typically charge fees for buying and selling cryptocurrencies which can range from 0.9 – 4.9%. According to the Business Daily, the sector is not regulated in Kenya and remains largely unregulated even in the developed world.

According to a United Nations Conference on Trade and Development report released in June last year, 8.5 percent of the population, or 4.25 million people own cryptocurrencies in the country. This places Kenya ahead of developed economies such as the United States, which is ranked sixth with 8.3 percent of its population owning digital currencies.

According to The Business Daily, young and small traders have in recent years flocked to cryptocurrencies in the hope of quick returns, despite warnings from regulators such as the Central Bank of Kenya (CBK) that emerging assets can be high-risk.

While there is growing adoption in the country, the Central Bank of Kenya (CBK) Governor, Patrick Njoroge in an advisory to Kenyans noted that cryptocurrencies posed risks to financial stability but they could be used to solve problems such as bringing the poor into the financial system or cutting transaction costs.