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In a landmark move signaling a shift in its digital finance strategy, Kenya has introduced its first comprehensive legislation to regulate the cryptocurrency and virtual asset ecosystem. The Virtual Asset Service Providers Bill 2025 seeks to establish a dual regulatory framework to govern a broad range of digital financial services, including stablecoins, initial coin offerings (ICOs), crypto exchanges, digital wallets, and investment advisory services dealing in virtual assets.
The proposed legislation designates oversight roles between two key financial regulators. The Central Bank of Kenya (CBK) will assume regulatory responsibility over wallet providers, stablecoin issuers, and crypto-based payment processors. Meanwhile, the Capital Markets Authority (CMA) will oversee licensing for crypto exchanges, tokenisation platforms, investment advisors, virtual asset brokers, and asset managers. This structure aligns with global regulatory compliance trends that emphasize institutional coordination and compliance management in emerging financial markets.
A major highlight of the bill is its formal inclusion of Initial Coin Offerings (ICOs) under regulatory oversight. Companies intending to raise capital through token issuance must seek approval from the CMA, submit detailed disclosures, and adhere to compliance rules akin to Initial Public Offerings (IPOs) in traditional capital markets. This move aims to enhance investor protection amid rising cases of fraudulent and failed ICOs.
The legislation also introduces a regulatory framework for tokenisation, allowing real-world assets like real estate, artwork, or commodities to be converted into blockchain-based tokens. Tokenisation platforms will be required to register with the CMA and disclose asset valuation methods, storage protocols, and transfer mechanisms—ensuring compliance audits, data privacy, and fraud detection protocols are in place.
For stablecoin issuers, the bill mandates strict licensing requirements, capital reserves, regular audits, and governance structures to minimize systemic risk—especially critical as stablecoins become a preferred medium for cross-border remittances and payments across Africa.
Non-compliance could result in significant penalties, including fines ranging from KES 3 million ($23,000) to KES 20 million ($155,000), imprisonment, or permanent exclusion from the sector. This strict regulatory enforcement framework underscores Kenya’s commitment to maintaining market integrity and financial stability.
This policy reversal marks a dramatic shift from CBK’s 2015 advisory cautioning the public against cryptocurrencies. Today, Kenya ranks among Africa’s most active crypto markets, driven by widespread mobile adoption and an increasing demand for alternative digital finance options. A 2023 report by FSD Africa found that 47% of Kenyan consumers own cryptocurrency, while stablecoin transactions across Africa surpassed $30 million over the 12 months ending July 2023.
If passed, the bill has the potential to unlock regulatory technology trends that enhance market trust, attract blockchain innovation, and fortify the country’s digital economy. However, its success will depend heavily on consistent regulatory monitoring, real-time compliance analytics, and the agility of enforcement agencies to adapt to the fast-evolving crypto landscape.
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