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Kenya has moved to strengthen regulatory oversight of stablecoins by giving the Central Bank of Kenya (CBK) powers to restrict local access to foreign-issued tokens, including Tether’s USDT, Circle’s USDC and Mento Labs’ USDm.
The Kenyan Virtual Asset Service Providers (VASP) Regulations, 2026, gazetted on July 24, prohibit licensed cryptocurrency exchanges from listing or offering stablecoins that have not been approved by the CBK and are not issued by a licensed stablecoin issuer.
The new requirement could compel offshore issuers such as Tether and Circle to obtain regulatory approval and work through licensed entities in Kenya if they want their stablecoins to remain available on regulated cryptocurrency platforms.
It also gives the CBK a direct mechanism for controlling access to foreign-issued stablecoins without necessarily requiring the central bank to exercise regulatory oversight over the offshore companies that issue them.
“A virtual asset exchange shall not list any stablecoin unless that stablecoin has been approved by the Central Bank of Kenya and is issued by a duly licenced stablecoin issuer,” the regulation states.
Stablecoins are digital assets designed to maintain a relatively stable value by being linked to an underlying asset, most commonly a fiat currency such as the US dollar. In Kenya’s cryptocurrency market, tokens including USDT and USDC are widely used for moving funds between platforms, maintaining dollar exposure, settling peer-to-peer transactions and accessing international digital asset markets.
CBK gains stronger powers over foreign stablecoins
The final regulations represent a significant expansion from earlier draft proposals, which provided regulators with broader powers to halt or delist stablecoin issuance but did not contain the same specific restriction targeting foreign-issued tokens.
The gazetted rules now provide the CBK with an explicit mechanism for restricting offshore stablecoins through locally regulated intermediaries.
“Where a stablecoin is issued outside Kenya, the Central Bank of Kenya may exercise its powers under this regulation by directing licenced intermediaries operating in Kenya to restrict access to, or trading of, such stablecoin,” the regulation states.
The approach reflects growing international regulatory scrutiny of stablecoins amid concerns around reserve backing, consumer protection, illicit financial flows and the increasing use of dollar-linked digital assets in cross-border payments.
Regulators in major financial markets have introduced or moved towards tighter frameworks governing fiat-referenced digital assets. The European Union’s Markets in Crypto-Assets (MiCA) framework, for instance, establishes authorisation requirements for certain stablecoin issuers, while regulators in the United States, Singapore and Hong Kong have also advanced measures aimed at strengthening oversight.
Kenya’s model is particularly notable because it focuses on market access rather than attempting to directly regulate offshore issuers.
Under the framework, the CBK would not necessarily require direct jurisdiction over companies such as Tether or Circle to influence whether their tokens can be accessed by users in Kenya. Instead, it could direct licensed local exchanges and wallet providers to restrict the listing, trading or availability of those assets.
The development could have significant consequences for Kenya’s cryptocurrency ecosystem, particularly retail traders and businesses that rely heavily on stablecoins.
Much of the country’s retail crypto activity takes place through peer-to-peer channels, with dollar-backed stablecoins often preferred to more volatile assets such as Bitcoin and Ether for payments, remittances and savings.
The regulations also introduce capital requirements for stablecoin issuers seeking to operate under Kenya’s regulatory framework. Issuers will be required to maintain KES 300 million (approximately $2.3 million) in paid-up capital, down from the KES 500 million (approximately $3.85 million) requirement proposed in draft regulations released in March.
The lower threshold could reduce the capital barrier for firms seeking to establish regulated stablecoin operations in Kenya. At the same time, the new restrictions make clear that access to foreign-issued stablecoins will depend not only on their availability on global blockchain networks but also on whether the CBK authorises licensed Kenyan intermediaries to offer them to local users.
The framework represents a significant development in Kenya’s regulatory approach to virtual assets, placing greater emphasis on regulatory compliance, licensing, risk management and regulatory monitoring as authorities seek to bring fast-growing digital asset markets within a clearer regulatory framework.
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