Kenya Adopts Landmark Cryptocurrency Regulation Law
The Kenyan Parliament has passed the Virtual Asset Service Providers Bill 2025, a law that regulates cryptocurrencies and creates a legal framework for a rapidly growing sector. The bill now awaits promulgation by President William Ruto to come into effect.
Key Provisions of the Law
The new legislation assigns specific responsibilities to financial authorities:
- The Central Bank of Kenya (CBK) will issue licenses for stablecoins and other digital assets.
- The Capital Markets Authority (CMA) will oversee exchange platforms and brokers.
- Companies in the sector will be required to:
- Establish a physical office in the country.
- Segregate client funds.
- Implement "Know Your Customer" and anti-money laundering rules.
- Undergo independent IT audits.
- Non-compliance may result in penalties of up to five years in prison or 25 million Kenyan shillings (approximately $193,500).
Structuring a Booming Market
Kenya is experiencing massive cryptocurrency adoption, with:
- Nearly 6.1 million Kenyans (10.7% of the population) owning digital assets.
- An annual transaction volume of $3.3 billion. The country aims to attract international platforms like Binance and Coinbase and position itself as a crypto hub in Africa, alongside South Africa and Mauritius.
Opportunities and Challenges
While the law provides a reassuring legal framework for investors, challenges remain, particularly for small operators or purely digital actors, who may be hindered by physical presence requirements and strict conditions. Kenya is leveraging its experience in mobile financial services, with M-Pesa, to integrate digital technologies and consolidate its position in African fintech.
