Kenya has proposed its first regulatory framework to regulate cryptocurrencies and other digital asset services, marking a major policy shift in one of Africa’s most active crypto markets. The Virtual Asset Service Providers Bill 2025 proposes licencing rules for stablecoins, initial coin offerings (ICOs), digital wallets, crypto exchanges, and investment advisors dealing in virtual assets. If passed, the bill would create a dual regulatory framework, assigning oversight roles to the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA).
Under the proposal, CBK will regulate wallet providers, stablecoin issuers, and crypto payment processors, while CMA will licence exchanges, tokenisation platforms, investment advisors, brokers, and virtual asset managers.
The bill also defines and brings Initial Coin Offerings (ICOs) under regulation. Any company issuing or selling digital tokens to raise money will be required to get approval from the CMA, disclose project details, and follow rules that resemble those of Initial Public Offerings (IPOs) in the stock market. If approved, the bill aims to protect investors, especially after a string of failed and fraudulent coin offerings.
It also introduces rules for tokenisation—converting real-world assets like land or artwork into digital tokens on a blockchain. Tokenisation platforms must register with the CMA and disclose how assets are valued, stored, and transferred. This could open up access to fractional investments but raises new concerns about verification and fraud.
Stablecoin issuers will also face new licensing and reserve requirements, including regular audits and governance standards—an effort to minimise systemic risks as dollar-pegged tokens gain popularity in cross-border remittances and payments.
Non-compliance could lead to fines ranging from KES 3 million ($23,000) to KES 20 million ($155,000), jail terms, and permanent blacklisting from the sector.
The bill marks a dramatic reversal from the CBK’s 2015 stance, when it warned the public to steer clear of cryptocurrencies, citing regulatory risks. Today, Kenya has one of Africa’s highest crypto adoption rates, driven by mobile penetration and a growing appetite for digital assets. A 2023 report by Financial Sector Deeping (FSD) Africa found that nearly half (47%) of Kenyan consumers own cryptocurrency, while stablecoin volumes across Africa topped $30 million over the 12 months ending July 2023.
If implemented, the legislation could boost investor confidence and attract blockchain-based innovation, but its success will depend on effective enforcement and regulators’ ability to keep pace with the rapidly evolving crypto market.
