NAIROBI, Kenya — The National Treasury has unveiled draft Virtual Asset Service Providers (VASP) Regulations 2026, signalling a decisive move to formalise and tighten oversight of the country’s rapidly expanding cryptocurrency sector.
In a public notice issued on Tuesday, March 17, the ministry outlined a comprehensive framework for licensing and supervising crypto-related businesses, including exchanges, wallet providers, and token issuance platforms.
The proposed rules are anchored in the Virtual Asset Service Providers Act, 2025 (Act No. 20 of 2025), which seeks to establish a regulatory framework for digital asset activities in and from Kenya.
“The Regulations are issued… to operationalise the Act whose objective is to provide for the legal framework for licensing and regulating the activities of Virtual Asset Service Providers,” the notice stated.
The draft introduces strict eligibility requirements. Only locally incorporated companies qualify for licensing; foreign firms must first obtain a compliance certificate before being considered.
All VASPs will be required to maintain a physical presence in Kenya, and their directors and senior officers will undergo background checks and competence assessments by regulators.
The rules also impose tight controls on asset backing and liquidity. Issuers will be restricted to holding reserves in low-risk, highly liquid instruments, including cash, central bank deposits, short-term government securities with maturities not exceeding 90 days, and repurchase agreements with maturities of up to seven days.
Stablecoin issuers face additional safeguards. At least 30pc of customer funds must be held in segregated accounts at Kenyan commercial banks. The remaining funds must be invested in high-quality liquid assets with minimal exposure to market, credit, and concentration risks.
To curb financial crime, the draft explicitly bans high-risk activities, including facilitating transactions that conceal user identities.
The move aligns with global anti-money laundering (AML) and counter-terrorism financing (CFT) standards increasingly applied to digital assets.
The Treasury has also proposed new levies targeting digital asset platforms. A 0.05pc transaction fee will apply to token issuance trades, payable by each party. Additionally, entities seeking approval for virtual asset offerings will pay 0.5pc of the value of a successful issuance.
Kenya remains one of Africa’s most active cryptocurrency markets, driven by widespread mobile money adoption and a youthful, tech-savvy population. Estimates indicate Kenyans hold about USD 1.2 trillion (Sh155 trillion) in virtual assets, underscoring the sector’s scale and economic relevance.
However, the absence of a clear regulatory framework has long raised concerns among policymakers about consumer exposure, fraud risks, and systemic financial vulnerabilities.
“This is a significant step toward legitimising the crypto ecosystem while addressing regulatory blind spots,” a Nairobi-based financial policy analyst said, noting that compliance costs may increase for smaller operators.
The Treasury has opened the draft for public participation, with stakeholder forums scheduled in major towns including Nairobi, Mombasa, Kisumu, and Eldoret. Submissions will be reviewed through April before the regulations are finalised.
