The Kenyan Treasury has introduced comprehensive regulations targeting stablecoin issuers, tokenisation companies, virtual asset exchanges, wallet providers, brokers, managers, investment advisers, and payment processors. This move responds to the growing adoption of digital currencies by Kenyans for payments, remittances, and business transactions.

Scope and Licensing Requirements

The Virtual Asset Service Providers (VASP) Regulations, 2026, complement the Virtual Assets Service Providers Act 2025, which took effect in November 2025. The new rules require licensing for entities including major crypto exchanges like Binance and Coinbase, wallet providers, stablecoin issuers, tokenisation platforms converting real-world assets into digital tokens, and virtual asset managers.

Importantly, foreign firms targeting Kenyan customers must also comply. Any company soliciting Kenyan users or generating revenue from Kenya is considered to be operating within the country and must obtain local licenses.

Consumer Protection Enhancements

Under the new framework, crypto investors will face stricter onboarding processes. Providers must verify identities, conduct due diligence, disclose fees, explain risks, and offer clear complaint mechanisms. Investors will also receive detailed information on withdrawal procedures, cybersecurity safeguards, and transaction confirmations.

Providers are obligated to clearly communicate their licensing status, business address, fee structures, and risk disclosures in simple language. They must also assess the suitability of investment advice and maintain formal systems for handling complaints.

Capital and Licensing Fees

Capital requirements vary by service type, with stablecoin issuers facing the highest minimum paid-up capital of Sh300 million. Virtual asset exchanges must hold Sh100 million, wallet providers Sh150 million, while token issuers and ICO platforms require Sh20 million. Tokenisation firms need Sh10 million, and virtual asset managers Sh20 million. Investment advisers are exempt from capital minimums.

License fees are set at Sh2 million for stablecoin issuers, Sh1 million for exchanges, Sh500,000 for wallet providers, and Sh200,000 for asset managers.

Rationale for Stablecoin Regulation

Stablecoins, digital currencies pegged to assets like the US dollar, are regulated more stringently due to their payment instrument nature. Issuers must maintain reserve backing for every coin, ensure redeemability, submit regular reports, and are prohibited from paying interest on stablecoins.

Regulatory Oversight and Governance

The Capital Markets Authority (CMA) oversees ICOs, trading platforms, token issuance, and tokenisation activities. The Central Bank of Kenya (CBK) licenses stablecoin issuers and authorises conversion of virtual assets into foreign currency. Other agencies such as the Directorate of Criminal Investigations and the Ethics and Anti-Corruption Commission hold inspection and investigative powers.

The regulations align crypto firms’ governance, capital, and cybersecurity standards closely with those of traditional financial institutions. Firms must appoint compliance officers, implement risk management frameworks, conduct independent cybersecurity audits, maintain disaster recovery plans, segregate customer assets, keep detailed records for seven years, and establish robust governance with independent directors.