Kenya Moves to Regulate Crypto Assets (VASP Bill)

Kenya Moves to Formally Regulate Crypto Assets in Landmark Policy Shift
In a significant policy shift, the Kenyan government has initiated a formal process to establish a comprehensive regulatory framework for cryptocurrency assets, moving to bring clarity and oversight to a rapidly growing but previously unregulated sector. The proposed legislation, developed through a multi-agency task force, aims to protect investors, combat financial crime, and position Kenya as a competitive hub for digital asset innovation in Africa.
The draft framework outlines requirements for the licensing and supervision of virtual asset service providers, including exchanges and wallet services, placing them under the oversight of the Capital Markets Authority. Key provisions focus on enforcing robust anti-money laundering (AML) and counter-financing of terrorism (CFT) protocols, ensuring consumer protection through disclosure and transparency rules, and creating a clear tax regime for crypto-related transactions. This move is seen as a direct response to both the rising popularity of digital currencies among Kenyans and concerns over fraud and market volatility.
The announcement has been largely welcomed by the local fintech and blockchain community. This provides the legal certainty we have been operating without for years, said a founder of a Nairobi-based crypto exchange. It legitimizes our industry, protects consumers, and makes Kenya more attractive to serious global blockchain companies and investors. The regulation is expected to encourage traditional financial institutions to engage more openly with digital asset firms, fostering greater integration between conventional and digital finance.
The long-term implications of this regulatory push are substantial. By establishing clear rules, Kenya is positioning itself to harness the potential of blockchain technology while mitigating its risks. A well-regulated environment is expected to reduce scams, encourage responsible innovation, and potentially pave the way for new financial products and services. This strategic move not only addresses a pressing market need but also signals Kenya’s ambition to be at the forefront of shaping the future of digital finance on the continent, balancing innovation with stability and consumer safety.