Chairman of Capital Markets Authority of Kenya (CMA Kenya) Reportedly Welcomes Crypto Innovations in CMA Kenya Sandbox

According to Chairman, Nicholas Nesbitt, the Capital Markets Authority of Kenya (CMA Kenya) will welcome crypto and blockchain startups to its sandbox.

The Capital Markets Authority is responsible for both regulating and developing orderly, fair and efficient capital markets in Kenya with a view to promoting market integrity and investor confidence.

One of the functions of CMA Kenya is to promote market development through research of new products and services after which it has a regulatory sandbox.


SEE ALSO: Kenya Capital Markets Authority Highlights Crypto and Blockchain Sandboxing Solutions Challenges in Kenya


The Capital Markets Authority’s Regulatory Sandbox is a bespoke regulatory environment that enables live testing of innovative capital markets related products, solutions and services with the potential to deepen and grow capital markets before their launch on the mass market.

So far, CMA Kenya has indicated that the sandbox considers any company incorporated in Kenya or licensed by a securities market regulator in an equivalent jurisdiction, and intends to offer a product, solution or an innovative service in Kenya after a successful exit from the regulatory sandbox. .

In 2021, the regulator revealed that out of 24 applications submitted to the sandbox since March 2019, at least 9 were related to blockchain technology and the tokenization of real estate. However, in this article we did, CMA admitted that they have encountered several challenges with blockchain businesses in the sandbox.

Some of the challenges they faced under Decentralized finance (DeFi), blockchain, cryptocurrencies and its derivativesincluded:

  • Novelty and complexity of the concept
  • Insufficient information about the universe of risks in this area
  • Lack of internal capacity to review these types of requests
  • Central bank objections to issuing cryptocurrencies
  • Fears around volatility affecting the local currency
  • Concerns about cybersecurity and data security
  • The challenge of multiple fintech companies providing a solution to solve the same common problem like e-KYC using blockchain

Live testing is conducted under a less onerous regulatory regime and is expected to appeal to fintech firms and existing capital markets intermediaries looking to add value through the application of technology to financial services , among other innovations.

The platform is intended to help CMA Kenya understand emerging fintech trends and provides an evidence-based tool to foster innovation and regulation while enabling the regulator to remain vigilant with respect to investor protection, stability financial and integrity risks.


RECOMMENDED READING: Bank of Uganda (BoU) welcomes crypto firms to its regulatory sandbox


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