Integrated Oversight and Licensing
Kenya is one step away from enacting its first comprehensive law to regulate digital assets after the National Assembly passed the virtual asset service providers (VASP) Bill at its third reading last week. The bill, which now awaits President William Ruto’s assent, is expected to formalize the country’s fast-growing crypto economy and position it as a leader in digital finance regulation across Africa.
According to a local report, the bill’s primary aim is to protect consumers, prevent financial abuse, and provide legal clarity for crypto businesses operating in or from Kenya.
A key feature of the legislation is its departure from earlier proposals to create a new, dedicated regulator. Instead, it assigns licensing and supervisory responsibilities to existing bodies: the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA).
Kimani Kuria, chairman of the Finance and National Planning Committee, praised the bill, stating, “This is a landmark moment for Kenya’s financial ecosystem. It provides clarity, promotes innovation, and protects consumers from fraudulent digital schemes.”
This coordinated approach is intended to avoid duplicating mandates and ensure the new regime is integrated seamlessly into the country’s existing financial system. The National Treasury, however, retains the authority to establish a separate virtual assets regulator in the future if deemed necessary.
The bill mandates that all entities offering virtual-asset services must obtain a license. Only companies limited by shares, whether local firms or foreign entities registered under the Companies Act, will qualify for licensing.
The regulatory framework also introduces strict operational safeguards for VASPs, including the requirement to maintain adequate protections for client assets through the segregation of funds. VASPs must also obtain insurance coverage and open bank accounts within Kenya to enable supervisory oversight. The legislation further empowers regulators to inspect, supervise, and impose sanctions on noncompliant operators.
The legislative push follows a recent fiscal adjustment made in the Finance Act 2025, which repealed the contentious 3% digital asset tax on asset value. It replaced it with a 10% excise duty on fees charged by virtual-asset platforms, shifting the tax burden from asset appreciation to service consumption.
If signed into law, the VASP Bill will mark Kenya’s first formal recognition of virtual assets, positioning it alongside regional peers such as South Africa, Nigeria, and Mauritius. Regulators are expected to issue detailed subsidiary rules to govern licensing procedures and compliance timelines soon after the law is enacted.
FAQ 💡
What is the latest update on Kenya’s crypto regulation? Kenya’s National Assembly passed the VASP Bill, making it one signature away from becoming the country’s first crypto law.
Which Kenyan regulators will oversee the crypto sector? Oversight is assigned to the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA), avoiding a new standalone regulator.
What are the key compliance requirements for VASPs in Kenya? All Virtual Asset Service Providers must obtain a license and maintain segregated client assets with insurance coverage in Kenya.
How does the new law affect crypto taxation in Kenya? The VASP Bill follows an adjustment that replaced the 3% Digital Asset Tax with a 10% excise duty on platform service fees.
