The Kenya Virtual Assets Service Providers (VASPs) draft Bill is a landmark attempt to bring clarity and accountability to the crypto sector.

While the draft marks a pivotal moment for the Kenyan digital assets space by bringing regulatory clarity o a dynamic and rapidly growing sector, it has also raised some eyebrows especially around its governance model.

While the proposed Bill provides for the creation of a Virtual Assets Regulatory Authority (VARA), industry stakeholders and legal analysts have questioned the governance structure of this body and what it could mean for the industry.

Some of the governance issues raised include:

  • The lack of guaranteed technical expertise

  • The risk of political influence, and

  • The built-in conflict of interest with the industry.

OPINION | Why the Upcoming Kenya Virtual Assets Regulatory Authority (VARA) Has Serious Governance Red Flags

In a detailed article, Muthoni Njogu, a seasoned Kenyan digital assets lawyer takes an objective look at how VARA is constitutedhttps://t.co/oRO8eVtltR @KeTreasury pic.twitter.com/qGyEMeug06

— BitKE (@BitcoinKE) June 28, 2025

As this debate unfolds, there’s a cautionary tale unfolding elsewhere on the continent:

The saga of AFRINIC, Africa’s regional internet registry.

The saga provides lessons on what can go wrong when there is regulatory capture of such institutions.

AFRINIC was designed to serve the public interest by managing IP address resources fairly and transparently. Instead, it has become a textbook example of regulatory capture:

  • Powerful private interests have manipulated governance processes

  • Exploited legal loopholes, and

  • Used the courts to weaken oversight mechanisms,

paralyzing AFRINIC’s core mandate.

What Happened at AFRINIC?

AFRINIC (African Network Information Centre) is the organization responsible for managing and distributing IP address resources across Africa. It was set up to ensure fair and transparent allocation of digital infrastructure critical to Africa’s internet ecosystem.

But instead of fulfilling this mandate, AFRINIC became a cautionary tale of regulatory capture.

 

The Core Issues

  1. Governance Capture

    • Certain individuals and commercial entities exploited gaps in AFRINIC’s bylaws and processes to gain outsized control over its decision-making structures.

    • This included attempts to pack the board, influence elections, and obstruct internal investigations.

  2. IP Address Hoarding

    • Massive blocks of IP addresses – intended for equitable distribution across Africa – were allegedly misappropriated by insiders or external actors working in collusion.

    • These resources were resold or leased for profit, undermining the public service AFRINIC was meant to provide.

  3. Legal Paralysis

    • Facing backlash, AFRINIC attempted to clamp down on abuses. But the implicated entities filed dozens of lawsuits in jurisdictions like Mauritius, where AFRINIC is registered.

    • These legal tactics froze AFRINIC’s enforcement powers, halted board decisions, and caused operational standstill.

  4. Institutional Breakdown

    • With its hands tied and leadership contested, AFRINIC could not fulfill its mandate.

    • Staff resignations, financial strain, and loss of trust followed, as African internet stakeholders watched their regional registry implode.

 Why It Matters

  • AFRINIC was meant to be a neutral, community-driven body. Its compromise demonstrates how easily institutions meant to serve the public interest can be hijacked by narrow interests if safeguards are weak.

  • The crisis threatens Africa’s digital sovereignty, as IP management is foundational to internet governance and connectivity.

 

Lessons for Kenya and the Virtual Assets Bill

As Kenya moves forward with the Virtual Assets Service Providers (VASP) Bill and establishes a new Virtual Assets Regulatory Authority (VARA), the AFRINIC saga is a wake-up call.

Without:

  • Transparent governance,

  • Strong conflict-of-interest policies,

  • Clear stakeholder representation,

  • and legal protections against abuse,

a captured VARA could become a gatekeeper that stifles innovation, favors incumbents, and deters the very investment and development it’s supposed to promote.

Kenya must not repeat this mistake with its proposed Virtual Assets Regulatory Authority (VARA). The current bill risks concentrating too much power in a small group of appointees, with little accountability to industry participants, civil society, or the public. This opens the door to conflicts of interest, opaque decision-making, and a chilling effect on innovation.

A better path forward is robust stakeholder representation, clear checks and balances, and transparent processes that guard against capture by well-connected industry giants. The future of Kenya’s digital economy depends on getting this right.

LATEST |

A post on @kenyanwalstreet reveals interesting developments amidst the ongoing Kenya Virtual Assets Providers Bill 2025

The post claims collusion between @binance and @vaspchamber to shape Kenya’s digital asset regulationhttps://t.co/VQI1DSHjs3 @MzalendoWatch

— BitKE (@BitcoinKE) June 27, 2025

 

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