Table of Contents
TL;DR,
- The newly enacted Kenya digital asset regulation legalizes the industry, replacing a banking ban with clear rules that are projected to create 25,000 jobs and attract $1 billion in foreign investment by 2027.
- The Act introduces a dual‑regulator model, splitting oversight between the Central Bank of Kenya and the Capital Markets Authority, and sets detailed licensing, AML/CFT/CPF, and governance requirements for exchanges, wallet providers, and token projects.
- For startups and global VASPs, Kenya now offers a defined path to crypto licensing—with six months to comply, mandatory local presence, and strict consumer‑protection rules—creating both new operational costs and a powerful legitimacy and banking‑access advantage.
The crypto boom happened, governments criticized and issued warnings, the citizens continued to use it, Chainalysis highlighted a billion+ transactions, and now the tone has changed.
The Blockchain Association of Kenya (BAK) published the first community-driven VASP bill draft on January 22, 2024, Kenya’s first attempt at regulation.
Kenya’s Parliament did not establish regulations in a hierarchical manner. Instead, they asked an industry group to get feedback from dozens of town halls and policy workshops across the country and then write the framework themselves.
This is the story of how a group of developers, policymakers, and innovators came up with the rules for digital assets in Kenya.
The Community-Driven Process: From Town Halls to Parliament
The Blockchain Association of Kenya didn’t start from scratch. The Financial Action Task Force (FATF) put Kenya on its “grey list” in February 2024, which put a lot of pressure on the country to set up anti-money laundering (AML) and counter-terrorism financing (CFT) controls for virtual assets.
The National Assembly Finance Committee responded by giving BAK a formal mandate:
Draft a VASP bill that could satisfy international standards while enabling local innovation.
Michael Kimani, BAK’s founder and chairman, describes the process:
“We held dozens of stakeholder meetings, collecting industry feedback—from exchanges and wallet providers to remittance firms and regulators.”
By March 2024, BAK had given Parliament the draft, which included licensing categories, consumer protection measures, and a regulatory sandbox for testing new ideas.
The National Treasury set up a multi-agency working group in February 2024 based on that first draft. The group included officials from the Central Bank of Kenya (CBK), the Capital Markets Authority (CMA), and the Treasury. The goal is to harmonize what the Blockchain Association of Kenya started with government policy and FATF recommendations.
The momentum kept going until mid-2025, when lawmakers held second-reading debates and looked at each clause in the Committee of the Whole House on October 2, 2025.
On October 7, 2025, Parliament passed the bill at third reading. President William Ruto signed it into law on October 15, 2025, and the Virtual Asset Service Providers Act officially came into force six days later.
What the Act Establishes: A Dual-Regulator Model
The enacted framework creates what legal experts call a “multi-tiered regulatory model” that distributes oversight across specialized agencies:
Central Bank of Kenya (CBK) regulates:
- Stablecoin issuers
- Crypto wallet providers
- Payment infrastructure tied to digital assets
Capital Markets Authority (CMA) supervises:
- Tokenized securities
- Crypto exchanges
- Initial Coin Offerings (ICOs)
- Crowdfunding platforms
Communications Authority (CA) oversees:
- ICT infrastructure
- Cybersecurity systems
- Digital platforms used by VASPs
According to Hon. Kuria Kimani, Chair of the Finance Committee;
“This structure is designed to balance safety and innovation, ensuring that both investors and businesses have clear guidelines for operating in the digital asset market.”
The Act’s guiding principles (Section 8) require regulators to “foster innovation and maintain fairness, transparency, and efficiency” while preventing conduct that “may cause damage to the financial reputation of Kenya.”
The True Impact of a Kenya Digital Asset Regulation
Kenya processed approximately $3.3 billion in stablecoin transactions in the year ending June 2024, according to Chainalysis. According to estimates from the industry, cross-border crypto flows were between $20 and $25 billion from July 2024 to June 2025. Kenya is the 28th country in the world and the 3rd in Africa to adopt crypto, with about 7.3 million users (13–14% of the population).
However, it was only until October 2025 that these activities existed in regulatory limbo. Banks routinely denied accounts to crypto firms and even individuals working in the sector.
According to Basil Ogolla, Director of the Virtual Assets Chamber of Commerce (VACC);
“Kenyan lenders have long refrained from partnering with digital asset firms for fear of regulatory repercussions,” Ogolla notes.
The VASP Act changes that.
“These clear laws will enable VASPs to integrate with traditional finance and access banking services,” Ogolla explains.
Parliamentary reports project the Kenya digital asset regulation could create at least 25,000 jobs in the next year and unlock $1 billion in foreign direct investment (FDI) for it’s fintech sector by 2027.
In June 2025, the Finance Act repealed the 3% Digital Asset Tax (DAT) on transaction value, which had been very controversial. It was replaced with a 10% excise duty on transaction fees, which went into effect on July 1, 2025.
Michael Kimani calls this “a massive win for high-volume traders and market makers,” though the fee-based tax still makes Kenyan exchanges slightly more expensive than unregulated offshore competitors.
How to Get a Crypto License in Kenya: Practical Requirements
The VASP bill gives current operators six months to apply for licenses. This is what the process needs:
Who can apply:
- Only incorporated companies (domestic or foreign with Kenyan registration) can get a license; sole proprietorships can’t.
- Must have a registered office in Kenya and a working bank account there.
- At least two directors (real people) are needed.
- Must hire a qualified CEO with proven experience in finance, technology, or compliance.
Documentation:
- A full business plan that explains the virtual asset services that will be offered
- Policies and procedures for AML, CFT, and CPF (Anti-Money Laundering, Counter-Terrorism Financing, and Counter-Proliferation Financing)
- KYC protocols and transaction monitoring systems that can analyze blockchain data
- Cybersecurity infrastructure and plans for responding to incidents
- Proof of minimum capital needs (amounts set by regulators; different for each tier)
- Procedures for separating client assets (funds can’t be mixed with company operational funds)
- The Financial Reporting Center (FRC) must register the Money Laundering Reporting Officer (MLRO), who is in charge of reporting money laundering.
Regulators usually have 90 days to decide whether to approve or deny applications after they have been fully submitted. Every year, all licenses expire on December 31, so they must be renewed.
Ongoing obligations include:
- Filing annual audited financial statements within three months of year-end
- Maintaining minimum capital, solvency, and insurance requirements at all times
- Immediate notification of material changes, cyber incidents, or ownership changes
- Full disclosure of fees, risks, and terms of service to clients
- Prohibition on market manipulation and pump-and-dump schemes
What This Means for Different Stakeholders
The regulatory limbo is out the window, and making sure you’re in step with this first round could be the marketing edge many local and global startups require.
Currently the Kenya digital asset regulation is in a transitional period, meaning it’s the optimal time to upgrade AML systems, establish proper governance structures, and arrange minimum capital. Operating without a license after the grace period is a criminal offense.
For international cooperation, your data must be accessible to Kenyan authorities, and mandatory physical presence is required. This prevents any “vanishing” acts prone to many crypto scams
As for consumer protection, the VASP bill establishes mandatory internal dispute resolution units, clear disclosure requirements, and due diligence obligations for VASPs offering tokens.
As Basil Ogolla notes,
“This builds confidence in the market and lays the groundwork for responsible growth,” particularly after “high-profile scams that have eroded investors’ confidence.”
The Blockchain Association of Kenya didn’t just advocate for a VASP bill—they drafted it, refined it through public consultation, and saw it enacted into law. That participatory model may prove as influential as the regulatory framework itself.
