REGULATION | Digital Sellers, Tech Firms in Kenya Face KES 10 Million (~$80,000) Fines, 5-Year Jail Term for Breaking Upcoming Competition Rule

The draft Competition (General) Rules, 2024 primarily target dominant behavior in Kenya’s digital economy, but while the text doesn’t explicitly mention digital assets (like crypto or tokenized products), its implications are relevant - especially in light of recent reports of regulatory capture in Kenya’s fintech and crypto sectors.

CryptoGuru··5 min read

Online businesses and digital platforms in Kenya could face fines of up to KES 10 million (~$77,000), up to five-year jail terms, or both, if found guilty of violating proposed digital competition regulations.

The draft Competition (General) Rules, 2024, released by the Competition Authority of Kenya (CAK), seek to regulate anti-competitive conduct in Kenya’s growing digital economy. The rules are aimed at firms offering services such as e-commerce, ride-hailing, food delivery, digital advertising, fintech, and online marketplaces.

 

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TL;DR:

  • Kenya’s draft competition rules touch digital assets indirectly but meaningfully.
  • In a market already marred by regulatory favoritism, these rules could enforce fair play – but only if applied equitably.
  • Without integrity in implementation, they risk becoming another tool for reinforcing captured power in the digital economy.

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The CAK says the regulations are necessary to curb practices such as:

  • Preferential treatment of a platform’s own products
  • Price manipulation, and
  • Misuse of consumer data

which can harm competition and disadvantage smaller players.


If enacted, the rules will apply to “digital enterprises with strategic market status” – firms with significant influence over their markets due to size, financial power, or platform control. These players will be subject to additional obligations to ensure fairness and transparency.

The rules require such firms to:

  • Submit annual compliance reports
  • Ensure equal treatment for third-party sellers, and
  • Prohibit self-preferencing

a practice where a platform ranks or promotes its own services or products over others.

 

“The authority proposes that firms with strategic market status shall not treat their own products or services more favourably in ranking than those of third-party businesses,” the draft regulations state.


Digital businesses that fail to comply risk penalties of up to KES 10 million (~$77,000), or a jail term not exceeding five years, or both, as provided under Kenya’s Competition Act.

The draft rules come as Kenya experiences rapid digitisation, with the CAK noting the need to strike a balance between promoting innovation and protecting consumers and small businesses from unfair competition.

The rules also empower CAK to investigate and monitor digital platforms and require them to make algorithmic decisions more transparent, particularly where those decisions affect pricing or product visibility.

Stakeholders have until July 15 2025, to submit comments on the draft before final regulations are gazetted.

 

The draft Competition (General) Rules, 2024 primarily target dominant behavior in Kenya’s digital economy, but while the text doesn’t explicitly mention digital assets (like crypto or tokenized products), its implications are relevant – especially in light of recent reports of regulatory capture in Kenya’s fintech and crypto sectors.

Here’s how it connects:

1.) Digital Assets Fall Within the Scope of “Digital Enterprises”

The CAK rules apply to any digital platforms offering online services – this includes fintechs, payment gateways, and platforms dealing in digital assets like stablecoins, tokenized securities, or crypto investment products.

That means large crypto or Web3 firms operating in Kenya could be classified as having “strategic market status”, making them subject to:

  • Stricter reporting and compliance
  • Restrictions on self-preferencing (e.g., promoting their own token or wallet over third-party providers)
  • Transparency around algorithms (e.g., how a DEX or crypto investment platform ranks tokens or fees)

2.) Recent Regulatory Capture Concerns Could Be Addressed – Or Reinforced

Recent investigations and media coverage have claimed regulatory capture in Kenya’s crypto and digital finance space – where certain companies allegedly influenced legislation to favor their own business models while excluding competitors.


This includes:

  • Attempts to exclude certain VASPs (Virtual Asset Service Providers) from licenses
  • Use of backdoor lobbying to lock in favorable rules for select platforms
  • Opaque decision-making by regulatory bodies


If enforced independently and transparently, CAK’s new rules could act as a counterweight by:

  • Leveling the playing field in the digital asset sector
  • Ensuring equal treatment for all platforms, including smaller crypto startups
  • Cracking down on firms using regulatory relationships to suppress competition

However, if the same captured interests influence who gets classified as having “strategic market status” or how investigations are conducted, the rules could entrench existing monopolies and be used selectively.

3.) Why This Matters for Web3 and Crypto Ecosystems

Crypto exchanges, stablecoin issuers, and blockchain-based marketplaces must prepare to justify their algorithmic choices and pricing models.

Transparency requirements might affect how on-chain and off-chain decisions are communicated to Kenyan users.

The CAK’s enhanced role adds a new layer of regulatory oversight for digital asset platforms – on top of pending crypto-specific laws.


 

 

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