What happened

Cobak, a Kenya‑based blockchain platform, confirmed that it will start the migration of its CBK token to the CoinNess network on 2 November. The announcement was made through an official statement released on the company’s website and shared on its social channels. The migration is a technical shift that will move existing CBK tokens from the current ledger to a new, upgraded blockchain environment. Cobak did not disclose the exact number of tokens involved, but it emphasized that the process will be phased and that token holders will receive detailed instructions in the coming weeks.

Context and background

Cobak was founded in 2020 to provide a suite of decentralized finance (DeFi) services, including token issuance, smart‑contract execution and peer‑to‑peer payments. The CBK token, launched in early 2022, has been used by small and medium enterprises (SMEs) to settle invoices, access micro‑loans and tokenise inventory. Over the past year, regulatory interest in crypto‑assets has grown, with the Central Bank of Kenya (CBK) issuing guidelines on digital token usage and anti‑money‑laundering (AML) compliance. In response, Cobak decided to upgrade its underlying technology to meet the new standards and to improve transaction speed and security.

The decision to migrate was taken after a series of stakeholder consultations that included token holders, fintech partners and legal advisors. Cobak’s technical team identified several limitations in the original ledger, such as slower settlement times during peak demand and occasional network congestion. By moving to the CoinNess platform—a blockchain solution that offers higher throughput and built‑in compliance modules—Cobak aims to address these issues while aligning with the CBK’s regulatory framework. The migration plan was drafted in Q3 2024 and received provisional approval from the Kenya Financial Reporting Authority (KFRA), which oversees digital asset reporting.

CoinNess, the target network, is a public‑private partnership that combines a permissioned blockchain for regulated entities with a public layer for broader accessibility. It has been adopted by a handful of Kenyan fintech firms for tokenised trade finance and supply‑chain tracking. The migration will therefore not only affect current CBK token users but also set a precedent for other Kenyan crypto projects considering similar upgrades. Industry observers note that successful execution could boost confidence in local digital‑asset ecosystems, while any hiccup might raise concerns about operational risk.

Compared with what is normal

Token migrations are not commonplace in Kenya’s fintech landscape; most projects either remain on their original chains or launch entirely new tokens. Historically, only a few initiatives—such as the 2021 M-Pesa token pilot—have undertaken a full‑scale migration, and those were limited to test environments. The typical timeline for a migration of this scale, when it occurs, spans three to six months of planning, a brief migration window of 48‑72 hours, and a post‑migration monitoring phase of up to two weeks. Cobak’s schedule, with a single start date of 2 November and a phased rollout over a few days, is more compressed than the norm, reflecting confidence in the CoinNess platform’s automation tools.

• Previous Kenyan token migrations have involved less than 10 % of the total token supply; Cobak has not disclosed its proportion, making direct comparison difficult.
• Average settlement time on legacy blockchains for similar DeFi tokens is 5‑10 minutes; CoinNess promises sub‑minute finality, a notable improvement.
• Regulatory compliance checks for token migrations usually add 2‑3 weeks of documentation; Cobak reports that its compliance package was pre‑approved, shortening the window.

Why it matters

For SMEs that have integrated the CBK token into their payment workflows, the migration means a temporary interruption of token‑based transactions on 2 November. Companies relying on token‑driven invoicing will need to pause or switch to alternative payment methods during the migration window to avoid missed payments. Additionally, the shift to CoinNess introduces new reporting requirements; the upgraded ledger captures richer transaction metadata that regulators may scrutinise more closely. Accounting teams will have to reconcile the pre‑migration token balances with the post‑migration records, a task that could affect quarterly financial statements if not managed promptly.

The migration also has tax implications. Under Kenyan tax law, digital assets are treated as property, and any change in token custody can trigger capital gains considerations if the token’s fair market value has shifted. While the migration itself is not a sale, the re‑valuation of tokens on the new platform may require businesses to adjust their tax provisions. Moreover, the enhanced AML modules embedded in CoinNess could lead to more frequent reporting of large token movements to the Financial Reporting Centre (FRC), increasing compliance workload for finance teams.

From a strategic perspective, the upgrade positions Cobak and its token holders to benefit from faster settlement, lower transaction fees and stronger regulatory alignment. Faster settlement can improve cash flow for SMEs that receive payments in CBK tokens, reducing the time between invoice issuance and cash receipt. Lower fees can translate into cost savings for businesses that process a high volume of token transactions. Finally, alignment with CBK guidelines reduces the risk of future regulatory penalties, giving firms greater confidence to expand their digital‑asset operations.

Practical steps

• Review communication from Cobak: Check your email and the Cobak portal for the detailed migration schedule and any required actions, such as updating wallet addresses.
• Prepare a backup of token records: Export current token balances and transaction logs before 2 November to ensure you have a verifiable audit trail.
• Coordinate with your finance team: Align the migration date with your accounting close calendar to avoid mismatches in financial reporting.
• Update internal payment procedures: Inform customers and suppliers that token‑based payments may be temporarily unavailable on the migration day and provide alternative payment instructions.
• Consult a tax advisor: Verify whether the migration triggers any tax reporting obligations or requires adjustments to your capital gains calculations.

Our Financial Management & Analysis service can help you map the migration impact on your books, ensure compliance with Kenyan tax rules and optimise cash‑flow forecasting during the transition.

Talk to our team at Beavoren Ventures - info@beavorenventures.co.ke - to set up your systems correctly.

Disclaimer: This article is informational and does not constitute formal tax, audit or legal advice. For guidance specific to your circumstances, please contact Beavoren Ventures.