What you should know as Kenya introduces bill to regulate crypto

Kenya is poised to become one of the latest African nations to regulate its rapidly growing cryptocurrency sector with the Virtual Asset Service Providers (VASP) Bill, 2025

Presented by the National Treasury, the legislation seeks to establish a comprehensive legal framework to oversee the country’s burgeoning digital asset ecosystem, valued at about KSh2.4 trillion ($18.54 billion) annually, equivalent to nearly 20% of Kenya’s gross domestic product (GDP).

The move reflects the government’s recognition of cryptocurrency’s economic potential and desire to curb associated risks such as money laundering and tax evasion.

The VASP Bill targets a wide range of players in the virtual asset space, including cryptocurrency exchanges, custodial wallet providers, token issuers, and other intermediaries.

With the sector expanding at an unprecedented pace, the legislation aims to bring clarity, accountability, and consumer protection to an industry that has operated largely unregulated until now.

Kenya’s proactive stance aligns with global trends, as countries like the United States, members of the European Union and Nigeria have also moved to tighten oversight of digital currencies in recent years.

Key features of the Kenya VASP Bill

A standout feature of the proposed law is its stringent stance on privacy-enhancing technologies known as “mixers” and “tumblers”.

These services, which obscure the origins and destinations of cryptocurrency transactions, have been implicated in illicit activities, including money laundering and terrorist financing. Under the new bill, operating or using such tools will be outlawed, with violators facing severe penalties

Individuals could be fined up to KSh3 million ($23,174.97), while corporate offenders may incur fines of up to KSh10 million ($77,249.90), alongside potential imprisonment. This provision underscores Kenya’s commitment to aligning with international financial standards set by bodies like the Financial Action Task Force (FATF).

The regulatory framework outlined in the bill assigns oversight responsibilities to two key institutions: the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA). The CBK will license and supervise custodial wallet providers and cryptocurrency payment processors, while the CMA will oversee exchanges, token issuers, brokers, and investment advisers dealing in virtual assets.

This division of roles aims to ensure specialised regulation tailored to the unique functions within the crypto ecosystem.

To enhance accountability, the legislation mandates that all virtual asset service providers (VASPs) maintain a physical presence in Kenya, including a registered office and a minimum of three natural-person directors.

Additionally, licensed providers must grant regulators real-time, read-only access to transaction data, a measure designed to strip away the anonymity often associated with cryptocurrencies.

These requirements signal a shift toward greater transparency in a market that has historically thrived on decentralisation and privacy.

The bill also hints at potential tax reforms, with reports indicating ongoing discussions between the government and the Kenya Revenue Authority (KRA) to integrate cryptocurrency platforms into the country’s tax compliance systems.

This could pave the way for new revenue streams, as Kenya seeks to capitalise on the sector’s economic contributions while ensuring that profits are not syphoned off untaxed.

Stakeholders call the Bill a welcome development 

Industry leaders have welcomed the proposed legislation, viewing it as a step toward legitimising and growing the crypto market in Kenya. Rachel Conlan, the global chief marketing officer of Binance, one of the world’s largest cryptocurrency exchanges, recently spoke at a press event in Nairobi, praising the government’s efforts.

“We are excited that regulatory clarity being set by Europe and being set by the US and already being taken seriously by Kenya is something that’s going to help us grow the industry more and create more economic opportunity,” Conlan said.

She emphasised that a clear legal framework would foster innovation, attract investment, and protect users while maintaining the integrity of Kenya’s financial system.

Kenya’s crypto boom has been fuelled by a tech-savvy youth population, widespread mobile money adoption (notably through platforms like M-Pesa), and a growing appetite for alternative financial systems.

However, the absence of regulation has left the sector vulnerable to scams, fraud, and exploitation. The VASP Bill aims to address these challenges by setting a high bar for compliance, though some critics argue that the stringent requirements could stifle smaller players and innovation in the nascent industry.

As the bill moves through the legislative process, it is expected to spark robust debate among policymakers, industry stakeholders, and the public. If passed, Kenya could emerge as a regional leader in cryptocurrency regulation, potentially influencing countries like Nigeria and South Africa, where digital asset markets are also gaining traction.

For now, the government’s message is clear: the Wild West days of Kenya’s crypto industry are coming to an end, and a new era of oversight is on the horizon.