- Kenya has taken a historic step toward regulating cryptocurrencies. The country is already highly active in the use of digital assets — from trading and peer-to-peer (P2P) transactions to remittances — ranking among Africa’s leaders in on-chain (blockchain) transaction volumes.
- Until now, there has been little specific regulation. Various Finance Acts have introduced certain taxes and obligations, but general financial rules have not adequately addressed the unique risks associated with digital assets.
- International organizations such as the FATF and the IMF have also been pressuring Kenya to close gaps in anti-money laundering (AML), counter-terrorism financing (CFT), and the anonymity of virtual transactions.
Kenya is now taking a major step forward with its first comprehensive legal framework for virtual assets — covering cryptocurrencies, stablecoins, and blockchain-based tokens — but only after removing a controversial clause that would have given a Binance-linked lobby group a seat within the national regulator.
On October 7, 2025, Parliament adopted the Virtual Asset Service Providers Bill (VASP Bill), which aims to regulate virtual assets and their service providers. The bill now awaits the final signature of President William Ruto.
The new legislation seeks to bring consistency to Kenya’s fast-growing digital asset sector, where around 4.5 million citizens — about 13% of the population — engage in cryptocurrency-related activities. For years, this ecosystem evolved without specific oversight, leaving consumers vulnerable to fraud and limiting formal investments.
The law introduces clear licensing and registration requirements for all Virtual Asset Service Providers (VASPs), including exchanges, brokers, wallet operators, and token issuers. It assigns supervisory responsibilities to the Central Bank of Kenya (CBK) for payment and custodial functions, and to the Capital Markets Authority (CMA) for investment and trading activities.
Beyond compliance, the legislation focuses on consumer protection. It prohibits misleading advertising, mandates transparent risk disclosure, and empowers regulators to suspend or revoke licenses in cases of misconduct. Violators face fines of up to KES 5 million (around USD 38,000) or imprisonment. A one-year transition period will allow existing operators to align with the new rules.
This framework fundamentally amends existing financial legislation to recognize certain virtual assets as securities, paving the way for regulated investment and trading products. It also integrates recent tax reforms, including the reduction of the digital asset tax rate from 3% to 1.5%, aimed at boosting adoption while maintaining fiscal prudence.
The real test will come in the Treasury’s subsidiary regulations — specifically, how they define capital adequacy, custody, and disclosure requirements for startups. These details will determine whether Kenya positions itself as Africa’s preferred hub for digital asset service providers or risks driving them abroad.President William Ruto is expected to receive the final bill within the coming weeks, paving the way for Kenya’s first comprehensive cryptocurrency law.
By Africa O’Clock, PR and Communications Agency
