The Kenyan government is working on a new bill to regulate contributions to campaign finance in time for Kenya’s upcoming election. The bill, dubbed the “Kenya Election Campaign Financing Act,” will make changes to campaign finance which includes regulating the use of Bitcoin and Ethereum. This means that the Kenyan government will be able to more closely monitor who contributes to campaigns, where money comes from, and how much each person can contribute.
According to Kenya’s Election Campaign Financing Act, contributions from lawful sources and contributions from Harambees can be used to finance an election bid. In addition, the amount and source of contributions must be disclosed.
Bitcoin and Ethereum have been all over the crypto news recently, as they have been adopted as a form of campaign donations in South Korea.
During Lee Jae-Myung’s presidential campaign, he announced that crypto assets would be accepted.His aim is to appeal to the young generation interested in digital currencies, and he became the Democratic Party of Korea’s candidate on October 10, 2021.
In exchange for the Bitcoin, Ether, or other crypto assets they donate, donors will receive a non-fungible token featuring Lee’s photograph and election manifestos.
The NFTs will be used as a means of exchange, through which the recipients may exchange digital assets for cash using a centralized exchange. In this case, the NFTs will serve as a form of bond.
A cryptocurrency can also hold future value, thus it can also be used as investment. South Korea’s cryptocurrency market has been flourishing, and as a result, strict regulations have been put in place to prevent scamming and money laundering.
According to the Korean National Election Commission, the Democratic Party accepts crypto in its campaigns without violating any election laws.
If Lee wins the presidential seat, he will be the very first president who supplied NFTs for campaign contributions in his presidential bid.
As the world’s economy grows, cryptocurrency adoption has increased and has been adopted for use in business transactions, payment of services rendered, and, as previously mentioned, campaigning bids.
According to a recent study, Kenya is one of the top three countries where the cryptocurrency market is growing, and over 2% of the GDP was accounted for by Bitcoin holdings in January 2018.
In Kenya, Article 11 of the Election Campaign Financing Act specifies that contributions from lawful sources and Harambee contributions may be used to fund an election campaign.
A contribution is defined in the Act as a contribution of monetary or non-monetary nature, including a donation, a grant, services to a candidate, assets, and so on.
Cryptocurrencies are described under the Payment Services Act as property values for federal income tax purposes. As such, their use in politics is not illegal under the law.
In spite of this, Bitcoin adoption hasn’t grown as fast as it should due to the CBK’s ban on banks dealing with digital currencies.
Governments and the public rely on the central bank to facilitate sound currencies and ensure that legal tender is used. Digital assets are not legal tender and are therefore not protected if an exchange platform ceases to operate, according to a CBK notice from December 2015.
Additionally, the CBK outlined the risks associated with virtual currencies, including:
- The use of platforms by criminals to launder money Loss of funds from closed exchange platforms
- Exposure to potential losses due to the high irregularity of digital currencies
This suggests that the CBK amend the objectives under section 4A of the CBK Act by authorizing the CBK to supervise cryptocurrency dealers.
It is also necessary to amend the Banking Act to include cryptocurrencies as part of the financial business within the banking sector in order to boost the economy by enhancing the scope of investments and proceeds.
It would be interesting to see how the regulators will decide if any candidates in the 2022 elections accept cryptocurrencies as donations.