Kenya Takes a Step Towards Regulating the Crypto Industry
Kenya has created its first regulatory framework for the crypto industry, requiring any virtual asset service provider operating within its borders to apply for a formal license. This ends a lengthy period of regulatory uncertainty for the sector.
The Kenyan Parliament has passed the Virtual Asset Service Providers Bill 2025, creating the country’s first crypto licensing framework. The Central Bank of Kenya and the Capital Markets Authority will jointly oversee exchanges, wallet providers, and affiliates. The law introduces consumer protections, AML standards, and operational safeguards as Kenya’s grassroots crypto usage continues to grow.
Key Provisions of the Virtual Asset Service Providers Bill 2025
The legislation requires any company offering crypto services – from exchanges to wallet providers – to obtain a license and submit to the oversight of a coordinated duo of existing regulators: the Central Bank of Kenya and the Capital Markets Authority. “This is a milestone for Kenya’s financial ecosystem. It provides clarity, promotes innovation, and protects consumers from fraudulent digital schemes,” said Kimani Kuria, Chair of the Finance and National Planning Board.
The bill contains a clear definition of who falls within its jurisdiction. A Virtual Asset Service Provider is defined as a limited liability company, either locally incorporated or a foreign legal entity registered under Kenyan law, licensed to provide crypto services. For licensed companies, the framework prescribes a series of operational security measures designed to create trust. VASPs must maintain robust protection for client assets, ensure insurance coverage, and maintain bank accounts in Kenya.
Operational Security Measures and Regulatory Oversight
They must also implement formal conflict of interest policies and maintain careful transaction records. To enforce these standards, the CBK and CMA are given broad powers to inspect, monitor, and sanction operators who fail to comply with the standards. The framework also explicitly extends anti-money laundering and counter-terrorism financing obligations to the crypto sector, bringing Kenya in line with key global financial security standards.
This top-down regulatory push comes at a time when a bottom-up crypto economy is already taking hold. The potential of this synergy is evident in places like Nairobi’s Kibera district, where a community-run “Bitcoin circular economy” has already processed over 2,000 small transactions. Innovations like the Machankura USSD platform enable users with basic mobile phones to conduct Bitcoin transactions without an internet data connection, while local platforms seamlessly integrate with the ubiquitous M-Pesa mobile money system.
Kenya Joins the Ranks of African Pioneers in Crypto Regulation
With President Ruto’s approval, Kenya will join a small group of African pioneers with established digital asset frameworks, including South Africa, Nigeria, and Mauritius. This move is expected to promote innovation, protect consumers, and provide clarity for the crypto industry in Kenya. For more information on Kenya’s crypto regulatory framework, visit https://crypto.news/kenya-ushers-crypto-into-the-regulatory-fold-with-new-bill/.
