Kenya’s parliamentary Ad Hoc Committee on Worldcoin operations has released its report. The committee was established on 15 August 2023 to investigate Worldcoin’s activities in the country.
Worldcoin is a cryptocurrency firm whose activities were suspended. The suspension was largely due to data privacy concerns raised by Kenyans. As a result, the National Assembly set out to explore the regulatory landscape for virtual assets in Kenya.
Worldcoin Exploited Regulatory Loopholes
The Ad Hoc committee was chaired by Hon. Gabriel Tongoyo. Hon Tongonyo also serves as the Chairperson of the National Assembly Committee on Administration and Internal Security.
Under his leadership, the team reviewed data protection and virtual asset regulations across several jurisdictions. They paid particular attention to the United States, where data protection laws are complex and constantly changing, and largely made up of sector-specific rules and state-level regulations.
Interestingly, the committee found, Worldcoin operated in Kenya, a country with no specific regulations on virtual assets, while abstaining from operating in the USA. Worldcoin claimed this was due to regulatory uncertainty.
This contrast in their approach raised questions about the exploitation of Kenya’s weaker legal framework in comparison to the USA.
Further, the committee looked into international models for regulating Crypto Asset Service Providers (CASPs). South Africa provided a notable example, emphasizing six principles to guide CASP regulation, aimed at promoting responsible innovation and overseeing provider conduct.
Worldcoin Poses a Threat to Statehood
The Committee’s findings and observations were multifaceted. They noted that Worldcoin’s primary objective of creating a global digital identification platform (World ID) aimed to verify individual identities.
They also found that Tools for Humanity Corp and Tools for Humanity GmbH had began operating in Kenya even before registering as data controllers. In fact, they disregarded orders and directives from Kenyan authorities, hence, violating Kenyan laws.
Furthermore, the Committee recognized that Worldcoin’s mission to decentralize the global monetary system posed a potential threat to statehood.
Unlike fiat currencies, cryptocurrencies are digital, encrypted, and decentralized, lacking a central authority to determine their value.
This value is determined through speculative actions by users, raising security concerns due to anonymity, borderless transactions, decentralization, and limited regulation in Kenya.
Parliament Committee Recommendations
Based on their findings, the parliament Committee made several recommendations. First, they recommend that Kenya should develop comprehensive oversight framework and policies for virtual assets and service providers in Kenya.
Secondly, the committee would like that within six months of adopting the report, the CS National Treasury, in collaboration with stakeholders, should create regulations and enforcement infrastructure to ensure adequate regulation and monitoring of virtual assets and service providers.
Lastly, the member recommends that the Office of the Director of Public Prosecutions (ODPP) should investigate the operations of Tools for Humanity Corp and Tools for Humanity GmbH in Kenya and take appropriate legal action.
In the course of its inquiry, the Ad Hoc Committee received submissions from a multitude of key stakeholders, including government bodies like the National Computer & Cybercrimes Coordination Committee (NC4), the Attorney General, and the Central Bank of Kenya (CBK).
In addition, private entities such as Sense Marketing Limited, Tools for Humanity Corp, and Tools for Humanity GmbH took part. Sense Marketing Limited is a local firm hired to collect data for Worldcoin.
Three university students involved in Worldcoin activities also shared their perspectives. The committee’s report will now be presented to parliament.
