Kenya Invites Public Feedback on Crypto Rules Ahead of April Deadline

Kenya’s National Treasury Cabinet Secretary John Mbadi on Tuesday published a formal notice in MyGov, the state-owned newspaper, inviting public comment on the draft Virtual Asset Service Providers Regulations, 2026. The consultation window runs until April 10, 2026, with a series of nationwide public forums scheduled from March 30 to gather input from industry stakeholders, regulators, and consumers.

The National Treasury, through a Multi-Agency Task Force and in consultation with the Central Bank of Kenya and the Capital Markets Authority, developed the draft regulations along with a Regulatory Impact Statement (RIS).

The draft rules represent the final legislative step required to operationalize the Virtual Asset Service Providers (VASP) Act, which was signed into law in October 2025 and came into force on November 4, 2025.

CBK takes payments, CMA takes exchanges

The regulatory framework is a joint effort between three government bodies. Under the draft framework, the CBK will oversee payment-related crypto firms, including stablecoin dealers and conversion rails, while the CMA will supervise exchanges, brokers, and tokenization platforms. The Ministry of Finance coordinates the broader policy direction through a multi-agency technical working group that has been in place since September 2023.

The RIS specifies the exact licensing categories under each regulator. The CBK will license and supervise Virtual Asset Wallet Providers, Virtual Asset Payment Processors, and Virtual Asset Offering Providers dealing with stablecoin issuance. The CMA will license and supervise Virtual Asset Exchanges, Virtual Asset Brokers, Virtual Asset Investment Advisors, Virtual Asset Managers, and Virtual Asset Offering Providers dealing with Initial Coin Offerings, VA Tokenization, and VA Token Issuance Platforms.

The dual-regulator model mirrors approaches adopted in other major markets, splitting oversight between monetary authority functions (payments, stablecoins) and capital markets functions (exchanges, investment products). This structure will determine which crypto businesses need which license and from whom—a question the industry has been pressing Nairobi to answer since the VASP Act passed without detailed implementing rules.

Beyond exchanges: ICOs, stablecoins, and tokenization under the microscope

The draft regulations go beyond exchange licensing. They set out detailed requirements for conducting Initial Coin Offerings (ICOs), issuing stablecoins, and tokenizing assets—including the information and documents that must accompany an application, as well as the factors the relevant regulatory authority will consider when assessing approval. This positions Kenya as one of the few African jurisdictions attempting to regulate the full lifecycle of digital assets, from issuance to trading to custody.

The regulations also mandate that licensed operators implement cybersecurity measures and surveillance systems to detect market abuse and financial crime, maintain business continuity plans, segregate and safeguard client assets, and comply with advertising and promotion restrictions on virtual asset products.

Licensees will be required to maintain paid-up capital and financial reserves proportionate to their scale and risk profile, along with insurance coverage, proper accounting systems, regular audits, and formal cybersecurity infrastructure. The compliance burden—spanning KYC/AML infrastructure, staff training, and ongoing regulatory reporting—is expected to be significant, particularly for smaller operators.

A $19B market exits the gray zone

The stakes are significant. Between July 2024 and June 2025, Kenyans received about $19 billion in cryptocurrency inflows, according to Chainalysis, and more than six million Kenyans use crypto, according to Triple-A. That makes Kenya East Africa’s largest digital asset market and one of the most active on the continent, behind only Nigeria, which processed an estimated $96 billion in crypto transactions over a similar period.

For years, Kenya’s crypto sector operated in a regulatory vacuum. The CBK first warned the public against virtual currencies in 2015, and the CMA followed with its own alerts starting in 2018. Neither agency, however, had a legal mandate to license or supervise crypto-specific businesses, leaving millions of Kenyan users without formal consumer protections and pushing crypto firms into legal gray areas that made banking relationships precarious.

A decade-long regulatory journey

The path from outright skepticism to formal licensing has been gradual. The major milestones include:

In 2015, the CBK issued its first public notice cautioning Kenyans against virtual currencies, declaring they were not legal tender and carried fraud risks. In 2018, the CMA echoed those warnings but stopped short of proposing legislation.

The turning point came in November 2023, when the National Treasury directed the creation of a comprehensive regulatory framework and introduced a 3% Digital Asset Tax on the gross value of crypto transactions—the government’s first formal acknowledgment that the sector could be taxed and, by extension, regulated.

In September 2023, the government formed the multi-agency technical working group that produced the current draft. The RIS published alongside the draft regulations cites the collapse of FTX Trading Ltd in November 2022 as a key example of why effective regulation is needed, noting that “the global virtual asset industry has witnessed rapid changes and volatility risks” that underscore the urgency of oversight.

By December 2024, the Treasury had published the Draft National Policy on Virtual Assets alongside the Virtual Asset Service Providers Bill, which moved through parliament and was signed into law in October 2025.

A notable tax policy shift followed: in 2025, Kenya scrapped the controversial 3% gross transaction tax and replaced it with a 10% excise duty on the fees charged by virtual asset providers—a structure that taxes platform revenue rather than user transactions, addressing industry complaints that the original levy was punitive and unworkable.

Notably, the Treasury’s Regulatory Impact Statement reveals that an outright ban on virtual asset activities was formally considered and explicitly rejected as one of three policy options. The government concluded that prohibition would carry “prohibitive enforcement costs and operational complexity” and would “inadvertently suppress technological innovation and place Kenyan citizens and businesses at a competitive disadvantage within the rapidly evolving global digital economy.” The decision to regulate rather than ban represents a decisive policy commitment that distinguishes Kenya’s approach from more restrictive jurisdictions.

Industry mobilizes ahead of licensing, but conflicts linger

The crypto industry is not waiting passively. In December 2025, more than 50 crypto firms formed the Virtual Asset Association of Kenya (VAAK), a lobby group designed to engage the CBK and CMA on proposed rules and advocate for a framework that balances compliance with innovation. VAAK has since partnered with Africa Digital Assets, a policy research firm, to coordinate regulatory engagement across the industry.

However, the process has not been without controversy. During the parliamentary debate over the VASP Bill, concerns emerged that the Virtual Asset Chamber of Commerce (VAC)—which was given a role in selecting members for the regulatory board—may have ties to Binance, raising questions about potential conflicts of interest in the rule-making process. VAC denied the allegations, stating it had earned its seat through years of engagement with the International Monetary Fund (IMF) and Kenyan government officials.

The regulations also align Kenya with the full scope of international financial integrity standards. The RIS consistently references a three-part compliance framework — Anti-Money Laundering, Countering the Financing of Terrorism, and Countering Proliferation Financing (AML/CFT/CPF) — reflecting FATF requirements. The inclusion of proliferation financing, which relates to the funding of weapons of mass destruction programs, signals Nairobi’s intent to meet the highest tier of global compliance expectations.

The African context: A continental regulatory wave

Kenya’s move is part of a broader regulatory push across the continent. South Africa became the first African nation to formally license crypto exchanges in 2024, when its Financial Sector Conduct Authority approved 59 applications under the Financial Advisory and Intermediary Services Act. Nigeria enacted the Investment and Securities Act 2025, granting its Securities and Exchange Commission (SEC) explicit authority to supervise digital assets. Ghana released draft supervision rules in 2024.

The IMF has been a consistent voice pushing African nations toward regulatory clarity, arguing that unregulated crypto markets expose developing economies to money laundering, capital flight, and currency destabilization. For Kenya specifically, the IMF urged alignment with global standards to reduce financial crime risks—a message that appears to have influenced the VASP Act’s inclusion of strict anti-money laundering and counter-terrorism financing provisions.

Three weeks to shape the rules

The immediate next step is public participation. Kenyans can submit written comments until April 10, and the nationwide forums beginning March 30 will serve as the primary venue for in-person input. Once the consultation period closes, the Treasury is expected to finalize the regulations and publish them in the Kenya Gazette, at which point the VASP Act’s licensing requirements will become fully enforceable.

For the more than six million Kenyans already using crypto, and for the exchanges and wallet providers that serve them, the next three weeks will determine what the rules of the game actually look like—licensing fees, capital requirements, compliance obligations, and the penalties for operating without authorization.

The Treasury’s own cost-benefit analysis concludes that the net impact of the proposed regulations is positive, arguing that benefits to consumers (fraud protection, formal complaint mechanisms), the financial system (reduced money laundering risk), and the economy (legal certainty attracting investment) outweigh the compliance costs to businesses and the supervisory costs to regulators.

The consultation represents a chance for the industry to shape those terms before they are set in stone.

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