The proposed Virtual Assets Regulatory Authority of Kenya (Varak), which is set to oversee the crypto industry, is facing headwinds as the industry lobby group plans to decline its allotted seat on the board — shortly after one of the regulators also requested to be left out of the joint body.
The government is banking on the establishment of a regulator for the crypto industry to enable it control the sector, combat illicit financial flows and bring income earned into the tax bracket.
The leadership of the Virtual Assets Chamber of Commerce (VACC), an industry association of companies in the sector, now says backlash from players in the field may force it to abandon the seat allotted to it in the joint regulatory authority.
This comes after the Competition Authority of Kenya (CAK) – one of five regulators proposed to constitute the joint crypto regulatory – also revealed it would be asking lawmakers to exempt it from the body.
CAK said it would prefer to independently regulate competition and consumer protection issues in the industry and collaborate with the joint regulator from outside.
VACC had been granted a seat at the proposed regulator by the National Assembly’s Committee on Finance and National Planning, which is considering the Virtual Assets Service Providers Bill, 2025.
The industry association insists it did not request nor lobby for the seat at Varak, but the committee’s decision to allot it the seat has raised opposition from various players in the industry, forcing it to reconsider accepting the role.
“We’re considering all alternatives and we’ll be making a decision soon in terms of what the way forward will be. We had an engagement last weekend, where we spoke with various stakeholders, and we’re reviewing that position,” said VACC chairperson Tony Olendo.
“It’s been more trouble than it’s worth, and we’re happy to remove ourselves from that position should it actually come to it.”
Some companies in the crypto industry have opposed VACC’s representation in the regulator, claiming that one company wields excess influence over the lobby and could use the position to steer the authority’s decisions in its favour.
Mr Olendo says some players felt they needed to be represented in the regulatory body in their own capacity, and rivalries between different companies worsened the backlash, prompting the chamber to reconsider taking up the role.
“Different people felt they deserve the seat more, different organisations have different interests, and there’s a lot of global and regional fights. So there are many competing interests that would not want to see us having that position,” he said.
The Bill, developed by the National Treasury, had initially proposed that the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) regulate the sector, with each assigned specific solution or service providers to oversee.
However, after public participation, the parliamentary committee backed a proposal to set up a separate regulatory agency, drawing membership from the two regulators, alongside the CAK, the Communications Authority of Kenya (CA), and the Office of the Data Protection Commissioner. VACC was to represent the industry players on the board.
Although it is meant to represent the entire industry, VACC has only six members – all startups in the crypto space. Mr Olendo says that its membership is open to all players in the industry.
