Kenya Introduces Regulatory Framework for Cryptocurrency
In a significant development for the financial landscape, Kenya has introduced a regulatory framework to govern its burgeoning cryptocurrency sector. The newly passed Virtual Asset Service Providers Bill, 2025, requires all entities offering virtual asset services, such as exchanges and digital wallets, to secure a formal license. This decision marks the end of the lengthy period of ambiguity regarding the regulation of cryptocurrencies in the country.
Legislative Approval and Oversight
On October 13, the Kenyan Parliament voted in favor of this landmark legislation, which now awaits the signature of President William Ruto, who is expected to endorse it. The framework will enforce rigorous oversight by both the Central Bank of Kenya and the Capital Markets Authority, aimed at safeguarding consumers while fostering innovation within this emerging market.
Kimani Kuria, chair of the Finance and National Planning Committee, lauded the bill, stating, “This is a landmark moment for Kenya’s financial ecosystem. It provides clarity, promotes innovation, and protects consumers from fraudulent digital schemes.”
Definition and Obligations of VASPs
The bill clearly defines a Virtual Asset Service Provider (VASP) as any local or foreign company registered in accordance with Kenyan law that offers crypto services. Licensed VASPs will be obligated to adopt strict operational standards, including:
- Safeguarding client assets
- Securing insurance
- Maintaining bank accounts in Kenya
- Establishing conflict-of-interest policies
- Keeping detailed transaction records
To ensure compliance with these regulations, the respective regulatory authorities—the Central Bank and the Capital Markets Authority—will possess extensive powers to inspect and discipline any VASPs that fail to adhere to the rules. Additionally, the bill stipulates that the crypto sector will be subject to anti-money laundering and counter-terrorism financing regulations, aligning Kenya with crucial international financial security practices.
Grassroots Movement and Integration
This regulatory initiative coincides with a grassroots movement in Kenya where cryptocurrency is increasingly being integrated into everyday transactions. A notable example is found within Nairobi’s Kibera community, where a local circular economy based on Bitcoin has already facilitated over 2,000 transactions. Platforms like Machankura, which allows Bitcoin transactions via basic mobile phones without requiring internet access, exemplify the adaptation of cryptocurrency to local needs, and many domestic platforms are integrating with the popular M-Pesa mobile payment system.
Conclusion
Once President Ruto signs the bill into law, Kenya will join a select group of African nations, including South Africa, Nigeria, and Mauritius, that have established formal frameworks governing digital assets.
