Kenya

Kenyan crypto tax bill makes it through parliamentary committee

The Capital Markets (Amendment) Bill will now be introduced to the lower chamber of the Kenyan parliament.

A bill defining crypto assets as securities and imposing capital gains tax on them has made it through a Kenyan parliamentary committee.

According to the Kenyan newspaper Business Daily on Dec.

“This is a very critical law that will guard our country against proceeds of crime and terrorism financing. We approve this Bill for publication.” 

After the Committee’s approval, the bill will head to the reading stage in the National Assembly, the lower chamber of the Parliament of Kenya. 

Related: Wallet crypto bot rolls out on Telegram in Colombia, SA and Kenya

The Capital Markets (Amendment) Bill, 2023, amends the country’s tax code, imposing taxes on crypto assets stored on crypto exchanges and digital wallets.

Should the bill pass, citizens of Kenya would be obliged to declare all their crypto assets and their value in Kenyan shillings to the Kenya Revenue Authority.

“A person who possesses or deals in digital currency shall provide the Authority with the following information for tax purposes—the amount of proceeds from the transaction, any costs related to the transaction and the amount of any gain or loss on the transaction.” 

While Kenya is only preparing to introduce its crypto taxes, the tax services in other countries have recently been quite vocal in their desire to chase all those who didn’t declare their crypto accurately.

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African blockchain ventures outpace global funding growth: Report

Africa witnessed a 429% YoY increase in venture funding in 2022, with the majority of funding coming from Seychelles and South Africa.

The African continent continues to be a fertile ground for the growth and implementation of blockchain technology.

According to the 2022 “African Blockchain Report” by CV VC, blockchain deals in Africa raised a total of $474 million in 2022, representing a 429% increase from the $90 million raised in 2021. This growth in funding far surpassed the global average, which only saw a 4% increase in blockchain funding.

According to the report, African blockchain funding demonstrated a growth rate that was over 12.5x higher than that of general African venture funding on a year-on-year basis. Overall African venture funding saw just a 34% increase, with $3.14 billion raised across 570 deals.

Africa experienced the highest growth rate in funding globally, while the United States remained steady at $15.2 billion in funding and Asia and Europe saw YoY increases of 50% and 35% with $4.74 billion and $4.88 billion in funding, respectively.

African blockchain venture funding by countries. Source: CV VC

Last year, Seychelles and South Africa were responsible for 81% of the blockchain venture funding in Africa, having raised $208 million and $177 million, respectively. Moreover, the total number of African blockchain deals increased by 12% YoY, from 26 to 29.

African blockchain venture funding made up 1.77% of global blockchain venture funding, which saw an impressive 407% YoY increase, with several countries contributing to the surge. By comparison, the U.S. concluded 137 deals while Asia and Europe had 84 and 78, respectively.

Related: Web3 economy to gain more traction in Africa through DeFi-based financial inclusion

Nigeria was the frontrunner when it comes to the number of blockchain startups receiving funding, followed by South Africa, Seychelles and Kenya. However, despite Nigeria having the highest number of deals on the continent in 2022, it only accounted for 3.4% of all African blockchain venture funding, with an average deal size of $1.25 million.

Taking into account the substantial increase in blockchain funding in Africa and the fact that there was a relatively small increase in the number of blockchain deals shows that the median deal size has significantly risen. This suggests that businesses are securing more substantial funding and investors are becoming more confident in African blockchain ventures.

Magazine: Bitcoin in Senegal: Why is this African country using BTC?

Web3 economy to gain more traction in Africa through DeFi-based financial inclusion

DeFi-based financial inclusion serves to increase liquidity and earning opportunities for African micro-entrepreneurs through Fonbnk’s partnership with Tanda.

Web3 in Africa began with cryptocurrency, with blockchain technology bringing a lot of transformation regarding transparency and people’s control over their finances. The Web3 economy in Africa continues gaining traction with decentralized finance-based financial inclusion.

Fonbnk, the Web3 on-ramp that allows Africans to obtain cryptocurrency assets by exchanging their airtime credits, has partnered with Tanda, a merchant network platform in East Africa, to launch an airtime trading marketplace across Tanda’s network of agents.

The partnership between Tanda agents and vendors in East Africa can increase liquidity in the marketplace through the buying and selling of prepaid airtime for profit. This, in turn, can create opportunities for agents to earn revenue and also allow them to store their profits in dollarized stablecoins.

The partnership gives African micro-entrepreneurs more earning opportunities, creating a growth flywheel effect through improved liquidity and marketplace efficiency. This cycle builds trust and generates even more liquidity. Moreover, this partnership enables more African users to participate in the Web3 economy — without requiring bank accounts or cards — by using only their airtime credits.

Although Fonbnk operates throughout Africa, its partnership with Tanda is concentrated in East Africa. Fonbnk plans to expand earning opportunities for African micro-entrepreneurs and bring decentralized finance-based financial inclusion to the masses across Africa.

During the first episode of Cointelegraph’s Hashing It Out podcast, the co-founder of Fonbnk identified the rise in crypto adoption as being due to several factors, such as the chance to earn money, inflation, currency devaluation and the ease of doing business on a global scale.

Web3 can open up an intra-African exchange economy, and it can be used for purchases and transportation between African nations thanks to the ability to be used between borders. It will assist Africans in generating more economic value in the wider market.

Related: Bitcoin gaming enters Africa with local crypto exchange partnership

According to BitcoinAfrica.io, the top five African countries whose communities are adopting Web3 and crypto are South Africa, Nigeria, Zimbabwe, Kenya and Ghana. They have the most demand for digital currency and the most active local cryptocurrency communities.

Magazine: Web3 Gamer: Shrapnel wows at GDC, Undead Blocks hot take, Second Trip

Strike partners with Bitnob to facilitate cross-border payments into Africa

On stage at AfroBitcoin, Strike CEO Jack Mallers announced plans to improve remittance payments into Africa thanks to Bitcoin’s Lightning Network.

The Lightning Network has struck Ghana, Kenya and Nigeria. During a conference in Ghana, Strike CEO Jack Mallers announced that the Bitcoin (BTC) payments company has partnered with the mobile app Bitnob to facilitate payments into Africa. 

Mallers made the announcement on stage at AfroBitcoin, a Bitcoin conference in Ghana’s capital city of Accra. He stood alongside Bernard Farah, the Nigerian CEO of Bitnob, following a short presentation on how it works.

Money transfers into Africa take advantage of the Lightning Network, the layer-2 payments network built atop Bitcoin. The feature is called “Send Globally,” and it enables instant, low-cost payments to Africa.

Diagram of the money transfer from Alice in Nigeria to Bob in the United States. Source: Facebook

The feature does not require people to use Bitcoin themselves, Bitnob CEO Bernard Parah explained on stage. The no-transaction-fee feature is currently available to Americans sending funds to Africans in Nigeria, Ghana and Kenya. By comparison, remittance services such as Wise take a small commission, while Western Union can charge upward of 10% for money transfers.

Dollar payments are instantly converted to Nigerian naira, Ghanaian cedi or Kenyan shillings and are deposited directly into a recipient’s bank account, mobile money wallet or Bitnob account.

Solving cross-border payments into Africa using Bitcoin would be a major boost to local economies. In Nigeria alone, $17.2 billion was sent in remittances to the country in 2020. However, according to World Bank data, “for every $200 sent in 2020, it cost the sender $17.8 (8.9 %).” That equates to roughly $1.5 billion lost in fees, or roughly the gross domestic product of Samoa.

If Nigeria were to eliminate remittance fees by using Bitcoin payment rails, Nigerians across the country would benefit financially. In Kenya and Ghana, the situation is similar. Thousands of Ghanaians and Kenyans live in the United States and regularly send money overseas. Crypto in Africa has surged in recent years, and remittance is one of the many reasons why. 

Related: Subway accepts Bitcoin, so users can get a sandwich on the Lightning Network

Mallers compared the instant peer-to-peer payment service to PayPal’s Venmo app, which allows rapid, frictionless payments between United States customers. Mallers said the Lightning Network has “just achieved dollars to Naira, Naira to dollars.”

The advancement is currently only available to Americans sending money to those living in Ghana, Kenya and Nigeria–English-speaking countries in Africa, although the rollout is set to continue across Africa.

This story is developing and will be updated with new info.

Kenyan legislation establishes crypto taxation, creates consumer protections

The country’s first effort at crypto regulation amends its Capital Markets Law to define crypto as a security and establish reporting, tax and other requirements.

An amendment was introduced to the Kenyan Capital Markets Law on Nov. 21 that would require those who own or deal in cryptocurrencies to provide the country’s Capital Markets Authority with information on their activities for tax purposes, local media reported. This is the first time Kenya has extended financial regulation to cryptocurrency.

Under the Capital Markets (Amendment) Bill, Kenyans would pay capital gains taxes to the Kenyan Revenue Authority when they sell or use digital currencies. Cryptocurrency held for less than a year would be subject to income tax, while after that, capital gains tax would apply. Kenya has an income tax that ranges from 10% to 30%. Banks already charge an excise duty of 20% on all commissions and fees on crypto trades.

The author of the bill, Member of Parliment Abraham Kirwa, said:

“The amendment will provide for […] the definition of digital currencies, its creation through crypto mining and provide for regulations around trading of digital currencies. […] The amendment will also outline responsibilities of persons or businesses trading in digital currencies, provide for its taxation, ownership and provide for promotion of innovation in this area.”

The bill would define digital currencies as securities, provide for the licensing of individual crypto traders and create a centralized electronic register of transactions in digital currencies in the country. It would also institute consumer protection measures, such as creating a fund “to protect investors from financial loss arising from the failure of a licenced broker or dealer” and privacy guarantees.

Related: From smart insurance to on-chain document verification: Here’s how Near aims to improve Kenya

A Chainalysis survey released in September ranked Kenya 19th worldwide in cryptocurrency adoption and fifth in peer-to-peer trading. The proposed amendment comes simultaneously with a call by Kenyan President William Ruto to double the country’s tax base. The country has about 4 million cryptocurrency users. At about 8.5% of the population, that gives Kenya the world’s fifth-highest rate of ownership.

Here’s how blockchains are helping to advance the global energy grid

Governments and environmentalists are quick to criticize the amount of electricity Bitcoin mining uses, but investors’ growing interest in crypto is leading to positive steps in the energy sector.

The blockchain industry’s impact on the energy sector has been a major source of controversy over the past five years. Governments and environmental protection advocates have routinely expressed concerns about the amount of energy required to keep the Bitcoin network secure. Data shows the network’s energy consumption now rivals the yearly energy consumed by some small countries.

Historical Bitcoin network power demand. Source: CCAF

While much of the debate has centered around the negative environmental impacts of Bitcoin (BTC) mining, the drive to maximize earnings from mining and integrate blockchain technology with the energy grid has also introduced new developments that have the potential to be beneficial in the long term.

Here’s a look at several developments that have arisen out of the demand for energy to operate blockchain networks and the positive effects cryptocurrency mining is having on the energy industry.

Recapturing wasted energy

One of the fastest-growing segments of the cryptocurrency mining industry is the monetization of historically wasted sources of energy such as natural gas that is flared at oil drilling facilities.

Discovering natural gas pockets is a common part of the oil drilling industry, and up until recently, this gas was typically burned in a process called “flaring” because the infrastructure needed for its collection was non-existent or there had not been sufficient demand for LNG.

As the value of Bitcoin rose over time, the search for inexpensive energy sources led to the installation of shipping containers filled with mining equipment at drilling sites that can utilize the energy generated from flaring to mine BTC.

While the process still results in carbon dioxide emissions, income is generated during the process and these funds could be redirected toward mitigating environmental concerns.

Most recently, several companies have been exploring the integration of mining via flared gas in the Middle East, which accounted for over 38% of the global flaring in 2020 and presented one of the biggest opportunities to turn wasted energy into value.

Blockchain technology can make energy generation more efficient

A second side-benefit of the push to maximize crypto mining profits is improvements to the energy infrastructure and an increased focus on developing sustainable forms of energy generation.

Studies by the Bitcoin Mining Council have shown that there has been a noticeable increase in the amount of energy derived from sustainable sources, as opposed to sources like oil and coal.

Less developed countries like Kenya and El Salvador have also been able to benefit from improvements in energy generation from sustainable sources like geothermal power plants, which have given their economies an additional source of income.

Whether it’s the utilization of excess power generated by hydroelectric power plants or an increase in the use of wind and solar power, crypto mining is providing a financial incentive to help further optimization of energy efficiency and generation.

Related: Marathon Digital moves Montana BTC mine to pursue carbon neutrality

Smart grid technology

Another energy-related blockchain development is the formation of blockchain-based smart grids that aim to improve energy distribution on a large scale.

Inefficiencies in electricity distribution have largely been traced to the retail level, where smaller firms who own very little of the electrical grid infrastructure mainly provide simple services such as billing and monitoring meter usage.

These types of services can easily be handled by blockchain technology and Internet-of-Things- (IoT)-devices that help consumers bypass retailers and connect directly with wholesale distributors, potentially reducing electricity bills by up to 40%.

Connecting consumers with a smart grid also allows them to shop around with different providers to obtain the best rates possible. This could help to level the playing field in an industry that has historically been dominated by one local energy company.

Projects like Grid+ and Energy Web Token are helping to lead the way in this field as the old grid design of physical substations and monitoring equipment is replaced with a network of distributed energy resources (DERs) that include battery energy storage systems, solar arrays and natural gas generators.

While the sector is still in a nascent phase, it’s a trend worth keeping an eye on because, in the coming years, blockchain technology is bound to be further integrated into the energy sector.

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