Kenya Proposes Strict New Rules for Cryptocurrency Firms

Kenya’s National Treasury has published draft regulations for Virtual Asset Service Providers (VASPs), setting out new rules to govern cryptocurrency businesses.

Issued under the Virtual Asset Service Providers Act of 2025, the proposals introduce strict licensing and compliance requirements for firms offering services such as exchanges, digital wallets, and token issuance platforms. Only companies registered in Kenya will qualify for licences, while foreign firms must obtain a compliance certificate before operating. 

Providers will also be required to maintain a physical office in the country, and their directors and senior officers will undergo background and competence checks.

The draft rules include specific provisions for stablecoin issuers. These firms must hold at least 30 percent of customer funds in segregated accounts at Kenyan commercial banks. 

The remaining funds must be invested in highly liquid, low-risk assets, including short-term government securities and central bank deposits. The requirement is intended to limit systemic risk and ensure that issuers can meet redemption requests during periods of market volatility.

The Treasury has also proposed new fees for digital asset activities. Token issuance platforms would be subject to a transaction levy of 0.05 percent, payable by both parties. Firms seeking approval for virtual asset offerings would pay a fee of 0.5 percent of the value of a successful offering. 

The regulations also prohibit high-risk practices, including transactions that conceal the identities of participants, to address concerns related to money laundering and financial crime. Kenya’s cryptocurrency market has expanded rapidly, supported by widespread use of mobile money and strong uptake among younger, technology-oriented users. 

Estimates indicate that Kenyans hold more than USD 1 trillion in virtual assets, highlighting both the scale of the sector and the risks associated with limited oversight. The proposed framework aims to strengthen investor protection and align the country with international standards in digital finance.

Public consultations on the draft regulations are in progress, with forums planned in Nairobi, Mombasa, Kisumu, and Eldoret. Stakeholders and members of the public have until April to submit feedback. The Treasury will then review the responses before finalising the regulations. 

If adopted, the measures are expected to significantly change the operating environment for cryptocurrency businesses, particularly those dealing in stablecoins and tokenised assets.