Kenyan crypto startups have raised serious concerns that the country’s proposed Virtual Asset Service Providers (VASP) Bill could unfairly tilt regulatory power in favour of Binance, the global cryptocurrency giant.
They warn that granting a Binance-linked lobby group a seat on the regulatory board risks stifling competition and undermining local innovation in the rapidly growing digital asset sector.
According to documents reviewed by The Kenyan Wall Street, the Virtual Asset Chamber of Commerce (VAC)— a lobbying group financially linked to Binance— is poised to secure a guaranteed seat on the VASP regulatory board established under the draft legislation.
Startups question the fairness and constitutionality of giving a private entity, which receives monthly payments from Binance, a direct role in shaping national crypto policy.
They argue that such an arrangement could disrupt fair competition and shape regulations to benefit the global exchange giant at the expense of local innovators.
Financial ties and conflict of interest allegations
“All regulation convos by VAC that happened recently have been sponsored by Binance. Then VAC, a private consulting entity, with a non-compete with Binance ‘magically’ gets a regulatory seat? How is this fair? How is this constitutional?” Kenyan Wall Street cited a source as saying.
Meanwhile, a confidential agreement reportedly reveals that Binance pays VAC $6,000 per country monthly for policy advocacy, fuelling fears that the group could shape Kenya’s crypto rules to benefit Binance.
The stakes are high for Kenya’s regulatory reputation. “If an entity of poor international reputation or one with clear conflict of interest becomes our crypto regulator, Kenya shall never leave FATF [Financial Action Task Force] and EU greylists,” warned another stakeholder.
VAC Director Basil Ogolla defended the group’s role, citing its two-year engagement with institutions like the IMF, Central Bank of Kenya (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 stated.
However, as the VASP Bill advances, startups demand safeguards to prevent regulatory monopolisation in the country.
“If Binance and other industry giants monopolise policy formulation in Kenya, there are risks that the country’s oversight capacities will be further weakened,” cautioned stakeholders.
VAC insists its membership includes local startups and denies favouring Binance. “Binance is not the sole or exclusive member of VAC… The proposed inclusion of VAC is designed to provide a unified voice within a broader body,” said Chairman Tony Olendo.
Kenya crypto startups’ goals
Kenya’s push for regulation follows years of rapid but ungoverned crypto adoption, which brought innovation alongside risks like scams and tax evasion.
The Kenya Revenue Authority collected KSh 10 billion from crypto traders in one year, indicating the sector’s economic strength.
Crypto startups in Kenya are primarily focused on ensuring a balance between innovation and unbiased regulation. The country’s next move could either position it as a model for equitable crypto governance or serve as a warning case of regulatory overreach.