The National Treasury has unveiled the draft regulations for Virtual Asset Service Providers (VASP) for 2026, introducing stringent measures aimed at protecting the burgeoning cryptocurrency sector in the country.
In an announcement made on Tuesday, March 17, the draft details how businesses involved in crypto activities, such as exchanges and wallet services, will need to be licensed and monitored.
The ministry stated that this initiative aims to bolster consumer safety, reduce financial crimes like money laundering, and bring clarity to a largely unregulated market.
“These Regulations are issued under the Virtual Asset Service Providers Act, 2025 (Act No. 20 of 2025) to operationalize the Act, which aims to establish a legal framework for the licensing and regulation of Virtual Asset Service Providers operating in and out of Kenya,” the announcement indicated.
An image showcasing the entrance of the National Treasury
Photo
National Treasury.
According to the Act, VASPs are required to follow several strict guidelines. The draft stipulates that only local entities can be licensed, while foreign businesses must secure a compliance certificate before being considered for a license.
Additionally, these providers must establish a physical presence within the country, and all directors and senior executives are obligated to pass a thorough background and competence evaluation conducted by regulators.
The proposed guidelines will limit issuers to retaining reserves in highly liquid, low-risk assets, including cash, central bank deposits, and short-term government securities maturing within 90 days, along with repurchase agreements having a maturity period of up to 7 days.
Furthermore, stablecoin issuers will be mandated to keep at least 30 percent of customer funds in segregated accounts at Kenyan commercial banks. The remaining assets must be allocated to secure, low-risk investments that qualify as high-quality liquid assets, with minimal susceptibility to market, credit, and concentration risks.
The draft also proposes new fees for digital asset platforms, suggesting a 0.05 percent transaction fee for token issuance platforms, payable by each trading party. Additionally, entities seeking authorization for virtual asset offerings will be required to pay a fee amounting to 0.5 percent of the value of a successful offering.
The regulations also prohibit specific high-risk activities, such as facilitating transactions that hide the identities of participants.
Kenya ranks among Africa’s leading markets for cryptocurrencies, driven by widespread mobile money usage and a young, technology-oriented population.
Kenyans are estimated to hold around USD 1.2 trillion (Ksh155 trillion) in virtual assets, with this new legislation aimed at providing essential safeguards to reassure both investors and companies about the security of pursuing new opportunities within the country.
However, the absence of defined regulations has raised concerns among regulators regarding potential risks to both consumers and the overall financial system.
If the proposed rules are enacted, they are expected to transform the operational landscape for crypto businesses in Kenya, especially for firms engaged in stablecoins and tokenized assets, while aligning Kenya with emerging global standards in digital finance.
The ministry is encouraging public input, launching forums in major cities such as Nairobi, Mombasa, Kisumu, and Eldoret. They urge members of the community and relevant stakeholders to provide their feedback regarding the proposed regulations.
The public consultation period is expected to continue through April, after which the treasury will review the feedback before finalizing the regulations.
Cryptocurrency scams are increasing in prevalence throughout the nation
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