Binance Faces Scrutiny in Kenya Over VASP Bill Ties

Binance, the global cryptocurrency exchange, is facing scrutiny in Kenya over its ties to the Virtual Asset Chamber of Commerce (VAC), a lobby association that is reportedly connected to the exchange. The controversy centers around Kenya's proposed Virtual Asset Service Providers (VASP) Bill, which aims to establish a regulatory board for the country's digital asset market. Critics argue that the bill could grant excessive power to VAC, potentially leading to unfair competition and regulatory capture.

The concerns stem from the fact that VAC is reportedly helping with the nomination of members to the regulatory board. Critics contend that this could erode the independence of the board and create a conflict of interest, especially given that Binance is said to remunerate VAC for policy advocacy. An unnamed stakeholder expressed their concern, stating, “VAC, non-competing with Binance private entity, now receives a seat at the table? This undermines fair regulation.”

The situation has sparked warnings of a broader trend, with critics citing VAC’s past lobbying efforts in Rwanda. There are also concerns that if VAC becomes influential in shaping Kenya’s crypto policy, it could struggle to exit the Financial Action Task Force (FATF) and EU grey lists, potentially putting the country at global reputational risk. An industry source commented, “If our regulator is conflicted in this manner, we can put ourselves at global reputational risk.”

In response to the scrutiny, VAC director Basil Ogolla defended the group’s role, highlighting its two-year engagement with institutions such as the IMF, Central Bank of Kenya, and Parliament. Ogolla stated, “The trust placed in the National Assembly is a consequence of VAC’s active role in developing well-rounded crypto regulation.”

Binance’s influence is not limited to Kenya. The exchange is also expanding its policy footprint in other countries. In May, Binance signed a Memorandum of Understanding (MoU) with the Kyrgyzstan investment agency to promote blockchain infrastructure. Earlier in April, Binance CEO Richard Teng reaffirmed ongoing consultations with governments regarding crypto reserves, while former CEO Changpeng Zhao was appointed as an adviser to Pakistan’s new Crypto Council.

As the VASP Bill advances, crypto stakeholders in Kenya are calling for checks and balances in regulator appointments. Ensuring that no single organization, especially one with powerful corporate clout, gets to monopolize the process is crucial to encouraging fair, open, and competitive crypto regulation in Kenya. The outcome of the VASP bill will be closely watched by industry participants and regulators alike, as it could set a precedent for how cryptocurrency is regulated in Kenya and potentially other regions.