Kenya Has Eased Crypto Rules, But Oversight is Tighter

Kenya has significantly softened some of its toughest proposed requirements for cryptocurrency companies while introducing new restrictions designed to prevent speculative trading in operating licences, marking a pivotal shift in how East Africa’s largest economy intends to regulate digital assets.

The revised framework lowers capital requirements for several categories of crypto businesses after months of lobbying by industry participants who warned that the original proposals risked driving investment elsewhere. At the same time, the government has introduced rules requiring firms to hold licences for at least three years before transferring them, an effort to ensure permits are used to build businesses rather than traded for profit.

The twin moves underscore Kenya’s attempt to strike a balance between encouraging innovation and protecting investors, placing it alongside jurisdictions such as the European Union, Singapore, Dubai and South Africa that have opted to regulate rather than prohibit digital assets.

The regulations implement the Virtual Asset Service Providers (VASP) Act, which came into force in November 2025, providing Kenya with its first comprehensive legal framework governing cryptocurrency exchanges, wallet providers, stablecoin issuers, tokenisation firms, investment advisers and other virtual asset businesses.

Lowering the cost of entry

The biggest change comes in the capital requirements.

Earlier proposals would have required stablecoin issuers to maintain paid-up capital of US$3.85 million (KES500 million), one of the highest thresholds in Africa. Following consultations with industry players, the Treasury has reduced that requirement to US$2.31 million (KES300 million).

Wallet providers must now maintain paid-up capital of US$1.15 million (KES150 million) together with liquid capital of US$230,000 (KES30 million) or 100% of current liabilities for at least 30 days, whichever is higher.

Tokenisation businesses, which convert ownership of assets such as real estate and bonds into digital tokens, must maintain paid-up capital of US$2.38 million (KES310 million) and liquid capital of US$1.54 million (KES200 million) or 8% of total liabilities, whichever is higher.

The regulations also eliminate paid-up and liquid capital requirements for investment advisers, opening the market to smaller firms that advise clients without holding customer assets.

The reductions follow warnings from industry groups that Kenya risked pricing itself out of a fast-growing global market.

Capital requirements remain among the highest on the continent, however, reflecting regulators’ determination to ensure only well-capitalised firms handle customer funds.

Preventing licence speculation

While easing financial barriers, the Treasury has simultaneously tightened rules governing ownership of crypto licences.

Licensed firms must begin operations within 12 months of receiving approval and may not sell or transfer their licences until they have operated for at least three years.

The restrictions are intended to stop investors from acquiring licences simply to sell them later at higher prices once approvals become scarce.

The approach mirrors licensing rules in sectors such as telecommunications, banking and mining, where governments require operators to demonstrate genuine commercial activity before ownership changes are approved.

The regulations also require companies seeking to transfer licences to obtain approval from regulators, ensuring oversight over changes in ownership.

A market too large to ignore

Kenya’s regulatory overhaul reflects the country’s growing importance in the global digital asset economy.

For years, Kenya has ranked among Africa’s leading cryptocurrency markets despite lacking dedicated legislation. The country’s sophisticated mobile money ecosystem, high smartphone penetration and large diaspora have made digital assets increasingly attractive for cross-border payments and savings.

According to blockchain analytics firm Chainalysis, Kenya consistently ranks among the world’s leaders in grassroots cryptocurrency adoption.

Statista estimates that the number of cryptocurrency users in Kenya grew from around 10,000 in 2017 to more than 733,000 in 2025.

The market’s evolution has also changed how cryptocurrencies are used.

While speculative trading remains common, businesses increasingly use stablecoins for international payments, importers settle invoices using dollar-backed digital currencies, freelancers receive overseas income through crypto networks and members of Kenya’s diaspora are experimenting with digital assets to reduce remittance costs.

Those developments mirror broader global trends.

Stablecoins have emerged as one of the fastest-growing segments of digital finance, processing trillions of dollars in transaction value globally as businesses seek faster and cheaper alternatives to conventional cross-border banking.

Licensing comes at a price

The new framework introduces substantial licensing fees designed to fund supervision while discouraging poorly capitalised entrants.

Virtual asset exchanges will pay an initial licence fee of US$7,700 (KES1 million) and annual renewal fees of US$3,850 (KES500,000) or 0.5% of gross revenue, whichever is higher.

Wallet providers will pay US$3,850 (KES500,000) for both licensing and annual renewal, while stablecoin issuers will pay US$15,400 (KES2 million).

Asset managers face an initial licence fee of US$1,540 (KES200,000), with annual renewal fees equivalent to 0.05% of assets under management, subject to minimum and maximum thresholds.

Companies seeking licences must also submit audited financial statements covering the previous three years. Newly established businesses must provide opening financial statements verified by auditors, while subsidiaries of foreign firms are required to submit consolidated audited accounts of their parent companies.

Applications will be jointly supervised by the Central Bank of Kenya and the Capital Markets Authority, reflecting the increasingly blurred lines between payments, investment products and financial market infrastructure.

Learning from global regulators

Kenya’s framework resembles regulatory models emerging in other major financial centres.

The European Union’s Markets in Crypto-Assets (MiCA) regulation has established a harmonised licensing regime across member states, while Singapore has adopted a licensing system centred on consumer protection and anti-money laundering controls. Dubai has created a dedicated regulator, the Virtual Assets Regulatory Authority, to attract international crypto firms, and South Africa has incorporated crypto asset providers into its financial regulatory framework.

Unlike jurisdictions that initially sought to restrict digital assets, policymakers increasingly view regulation as a way to bring crypto businesses within the formal financial system while improving transparency and reducing systemic risk.

Kenya appears to be following that path.

Balancing innovation and risk

The revised regulations suggest policymakers have recognised that excessive barriers could drive companies into less regulated jurisdictions while weak oversight could expose consumers to fraud and financial crime.

Digital assets continue to present significant regulatory challenges, including money laundering, terrorism financing, cybercrime and consumer protection risks arising from their pseudonymous nature and the speed of cross-border transactions.

Yet they also offer opportunities.

Kenya’s position as one of Africa’s most digitally connected economies gives it the potential to become a regional hub for regulated virtual asset services if it can establish rules that encourage responsible innovation while maintaining confidence in the financial system.

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