Kenya has reduced the minimum paid-up capital for stablecoin issuers by 40 percent, lowering the threshold from Sh500 million to Sh300 million. This move aims to encourage more firms, both local and international, to enter the country’s expanding virtual currency sector.

Despite easing the capital requirement, the government has retained stringent regulatory measures to safeguard investors amid rapid growth in digital assets. Kenya’s virtual currency market is projected to reach $400 billion (about Sh520 billion) in 2024, nearly doubling in value over the past two years.

Regulatory Oversight and Investor Protection

  • The Central Bank of Kenya (CBK) holds broad authority to supervise stablecoin issuers and virtual asset service providers.
  • CBK can order suspension of token issuance or redemption and restrict trading of stablecoins on licensed platforms.
  • The regulations enable the central bank to limit circulation of offshore-issued stablecoins by directing local operators to stop offering them, even without licensing foreign issuers directly.
  • Stablecoin reserves must be held in segregated trust accounts within Kenyan banks, with at least 30 percent of funds accessible for issuance and redemption.
  • Remaining reserves are to be invested in approved local assets, ensuring backing in the same currency as the stablecoin’s peg.

Licensing and Financial Requirements

  • Stablecoin issuers face a Sh100,000 application fee and a Sh2 million licensing fee, higher than wallet providers who pay Sh100,000 and Sh500,000 respectively.
  • Issuers must maintain liquid capital of at least Sh60 million or 100 percent of current liabilities; wallet providers require Sh30 million or full coverage of liabilities for 30 days.
  • Issuers are prohibited from offering interest or rewards linked to holding stablecoins, effectively banning yield-like incentives.

Transparency and Accountability

  • All stablecoins must be fully backed one-to-one by eligible reserve assets such as cash, bank deposits, and government securities.
  • Reserve assets are legally separated from company funds and protected from creditors in insolvency scenarios.
  • Issuers must conduct quarterly stress tests and submit monthly reports detailing reserves, circulation, and transaction volumes.
  • Customers must be able to redeem stablecoins at face value within two working days.
  • Directors, senior executives, and auditors face personal liability for investor losses due to misleading information in stablecoin white papers.

Kenya’s regulatory framework positions the country as a leading global cryptocurrency market, ranking fifth in crypto adoption worldwide according to Bybit's 2025 World Crypto Ranking. Stablecoins play a key role in cross-border payments and as a hedge against currency volatility.