Kenyan lawmakers are considering imposing a 3% tax on transfers of cryptocurrencies and non-fungible tokens, and a 15% tax on monetized content online, under a newly introduced bill.

The Finance Bill 2023, which was introduced to the Kenyan parliament on May 4, would impose a digital asset tax on “income derived from the transfer or exchange of digital assets” and also includes specific language for NFTs.

The bill will go through five rounds of reading, committees and reports in the National Assembly; if passed, it will go to the President for final assent into law.

Cryptocurrency exchanges or those initiating transfers of cryptocurrencies or NFTs will be required to collect taxes and must deduct 3% of the value of the transfer to pay to the government. Exchanges that are not registered in Kenya must register under the tax system.

The bill also seeks to tax the “monetization of digital content,” imposing a 15% tax on content creators paid to promote and advertise products and services online, including but not limited to sponsorships, affiliate marketing, merchandise sales, and paid subscriptions.

The digital assets portion of the bill received mixed reactions online.

Some are pleased to see that cryptocurrencies and NFTs now appear to be officially recognized in the country. Previously, the Central Bank of Kenya had warned against the use of cryptocurrencies but stopped short of an outright ban.

Rufas Kamau, a Kenyan research and market analyst, tweeted on May 4 that the 3% tax was “a joke” and sarcastically asked if it would apply to “supermarkets and credit card loyalty points.”

Kenyan crypto advocacy group Cryptocurrency Kenya said on Twitter that such a digital tax “must apply [...] to all digital,” claiming that taxing only crypto is “targeted harassment.”

It also noted that the tax is higher compared to the fees charged by exchanges, comparing the government’s proposed 3% tax to Binance’s 0.10% trading fee.

Kenya made its first effort to regulate cryptocurrencies in November, amending its capital markets law to require people who own or trade cryptocurrencies to report information about their activities to authorities.

Kenya ranks among the top 20 countries in terms of cryptocurrency adoption. A September report by blockchain analytics firm Chainalysis ranked the country 19th in crypto adoption.