Kenya has made a major step toward regulating the digital asset ecosystem with the introduction of the Virtual Asset Service Providers Bill of 2025.
The aim is to regulate the cryptocurrency sector. It is also part of the current government’s efforts to enhance tax compliance and combat financial crimes such as money laundering and terrorism financing.
For starters, the bill from the National Treasury mandates joint regulatory oversight of the crypto industry by the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA). This includes licensing and supervision of virtual asset service providers (VASPs) within Kenya, with potential for additional public bodies to be involved.
CBK will oversee virtual asset wallets and stablecoins, while the CMA will regulate exchanges, investments, and Initial Coin Offerings (ICOs). The CMA also regulates token issuance platforms for real asset tokenization.
The bill excludes individuals from offering virtual asset services. Operating virtual asset services in Kenya requires a license, exclusively granted to corporate entities. Individuals are prohibited from obtaining such licenses.
In an effort to safeguard consumer interests, the regulatory framework imposes stringent requirements on virtual asset service providers, including the segregation of customer assets, strict compliance with data protection laws, and a ban on anonymity-enhancing services. Crypto exchanges and wallet providers are obligated to disclose the identities of cryptocurrency owners.
There are enhanced anti-money laundering and counter-financing of terrorism protocols. These protocols encompass mandatory compliance checks and audits, thorough vetting of shareholders, regulatory inspections, and the application of substantial penalties in cases of violations.
Non-compliance with the regulations will be costly. The proposed legislation stipulates increased financial penalties, with individuals facing fines of up to KES 3 million and companies facing fines of up to KES 10 million.
