Kenya is on the verge of becoming one of Africa’s most clearly regulated crypto markets after lawmakers approved the Virtual Asset Service Providers (VASP) Bill—a framework that could bring stablecoins, crypto exchanges, and digital-asset platforms under formal oversight. The bill, championed in the National Assembly by Finance Committee chair Kuria Kimani, now awaits President William Ruto’s assent to become law.
What the bill does
The VASP Bill divides supervisory duties between two core regulators to reflect how different pieces of the crypto stack function in practice:
- Central Bank of Kenya (CBK): Licensing authority for stablecoin issuance and other virtual assets whose design or operation resembles money-like instruments.
- Capital Markets Authority (CMA): Licensing authority for exchanges, broker-dealers, and trading platforms, aligning crypto market infrastructure with securities-style conduct and disclosure rules.
This split mirrors global best practices, recognizing that payments-oriented tokens and market-facing venues carry different risks. It also gives both regulators clear lines of accountability for consumer protection, prudential standards, and market integrity.
Why it matters for Kenya—and Africa
Kenya already sits at the intersection of mobile money and digital finance. With M-Pesa and a deep culture of mobile-first payments, the country has the user behavior and developer ecosystem to commercialize new rails quickly. Clear rules could attract heavyweight exchanges and service providers seeking an East African hub, unlock local investment, and accelerate enterprise-grade tokenization use cases.
Crucially, the bill addresses a familiar regulatory dilemma: stablecoins. Dollar-pegged tokens have grown rapidly worldwide, raising concerns about currency substitution in emerging markets. By making the CBK the gatekeeper for issuance and reserve standards, Kenya is signaling that stablecoins can operate—but inside a prudential perimeter. That stance aims to capture innovation benefits (faster cross-border payments, programmable money) while mitigating risks to monetary sovereignty and financial stability.
What firms can expect
Assuming presidential assent, market participants should prepare for a licensing and compliance regime that likely includes:
- KYC/AML and travel-rule obligations across on- and off-ramps
- Disclosure requirements for token listings, custody practices, and conflicts of interest
- Reserve attestations and redemption mechanics for stablecoins, supervised by the CBK
- Operational standards for custody, cybersecurity, market surveillance, and incident reporting
- Consumer protection guardrails around marketing, risk warnings, and complaint handling
For global exchanges and custodians, Kenya’s clarity may be the green light to expand local partnerships, talent hubs, and liquidity programs. For domestic fintechs, it creates a path to compliance and a realistic way to connect mobile money rails with tokenized assets and blockchain-based settlement.
The youth and SME angle
Kimani emphasized that 18–35 year-olds are already using digital assets for trading, payments, and micro-commerce. A lawful path could formalize those flows—bringing users into supervised channels, widening tax visibility, and reducing fraud exposure. For SMEs and freelancers paid across borders, stablecoin rails under CBK oversight could cut settlement times and FX friction, as long as providers meet licensing conditions.
Balancing openness with safeguards
The bill borrows elements from U.S. and U.K. approaches while adapting them to Kenya’s realities: high mobile-money penetration, vibrant fintech entrepreneurship, and an active developer community. The design principle is pragmatic: permit innovation, supervise risk, protect consumers. Kenya also joins South Africa among African markets with comprehensive crypto rules—another sign that the continent is moving from ambiguity to regulated experimentation.
What’s next
If signed, the bill will trigger rulemaking and licensing windows at the CBK and CMA. Expect transitional guidance, sandbox pathways, and staged compliance deadlines. The near-term winners will be firms that invest early in governance and transparency—especially around reserves, custody, and market abuse controls.
