Kenya Admits Blockchain And Foreign-stock-trading Startups Into Sandbox Regime

Kenya is never leaving its growing startup ecosystem behind, including in its capital markets. Since the launch of the country’s record-breaking regulatory sandbox licensing regime in March 2019, the Capital Markets Authority (CMA) has admitted seven companies into the scheme. The Regulatory Sandbox Policy Guidance Note (Regulatory Sandbox PGN) which was approved in March 2019 is part of CMA’s strategic focus to leverage technology across the capital markets value chain, as espoused in its 2018–2023 Strategic Plan. The CMA has also launched a report studying the performance of the sandbox regime so far. 

CMA Chief Executive, Wyckliffe Shamiah
CMA Chief Executive, Wyckliffe Shamiah

“The Authority’s commitment to the introduction of the sandbox is aligned to the Capital Market Master Plan (CMMP, 2014–2023) which identifies technological innovation as one of the five centres of excellence of the Kenyan capital markets,” The CMA Chief Executive, Wyckliffe Shamiah said. 

Here Is What You Need To Know

  • Pezesha Africa, Innova Limited, Genghis Capital Limited, the Central Depository and Settlement Corporation (CDSC), Pyypl Group Limited, Belrium Kenya Limited, and Four Front Management are among the companies that have been admitted to the Regulatory Sandbox. 
  • The CMA has received 24 applications in the areas of robo-advisory, blockchain technology, real estate tokenization, global stock access, crowdfunding platforms, Electronic Know Your Customer platform, Screen-Based Security Lending and Borrowing platform, Regtech solutions, and Data Analytics.
  • CMA’s keen interest in proactively reviewing its supervisory and regulatory model to take into account the fast-changing environment across the capital markets’ product and service architecture, technology, and supervision was noted by Shamiah, who launched the CMA Regulatory Sandbox Study.

“CMA has been at the forefront of implementing initiatives to stimulate and support the growth of FinTech and innovation within Kenya’s capital markets,” Shamiah said. 

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“In line with its facilitative role, the Authority seeks to provide a conducive regulatory environment for the deployment of innovative FinTech and business models that have the potential to deepen capital markets in Kenya,” she added. 

Crypto projects granted approval for regulatory sandbox testing  in South Africa
In simple terms, this is how a regulatory sandbox works. Image credits: LinkedIn
  • The report highlights some of the main achievements, including SMEs receiving funding through Pezesha Limited’s crowdfunding platform.
  • It also goes into the core lessons learned by the sandbox review committee, as well as the opportunities found so far and how they will be implemented to improve future sandbox engagements.
How to apply to the regulatory sandbox license in Kenya. Source: CMA
  • The Authority has also gathered information to aid in the implementation of a Fintech-friendly regulatory system. CMA has also been pursuing collaborations with key stakeholders, which are important catalysts for the capital markets’ growth and development.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer