Kenya has moved from proposing crypto regulations to implementing a formal framework for virtual asset businesses. The National Treasury initially released draft Virtual Asset Service Providers (VASP) Regulations in March 2026 for public consultation.
The rules were developed under Kenya’s Virtual Asset Service Providers Act, which took effect in November 2025. The consultation closed on April 10, after which the framework was revised and eventually proposed in July 2026.
The regulations establish licensing, capital, governance, reporting, cybersecurity and consumer-protection requirements for businesses operating in Kenya’s virtual-asset market.
Stablecoin Reserves and Compliance Take Center Stage
Stablecoin issuers face some of the most detailed requirements under the framework. Issuers must fully back their outstanding stablecoins with reserve assets and maintain custody arrangements that protect those assets from claims by custodians’ creditors.
At least 30% of funds received for stablecoin issuance must be held in segregated accounts at commercial banks in Kenya. The remainder must be invested in secure, low-risk assets in Kenya that qualify as high-quality liquid assets. The rules also require reserve assets to be held with a custodian approved by the Central Bank of Kenya.
The framework also divides regulatory responsibility between Kenya’s financial regulators. The Central Bank of Kenya oversees stablecoin issuers, wallet providers and payment processors, while the Capital Markets Authority supervises exchanges, brokers, investment advisers, virtual asset managers and tokenisation and issuance platforms.
VASPs must also meet customer due-diligence, reporting and cybersecurity requirements. Records must be retained for at least seven years, while firms are subject to ongoing regulatory reporting and technology controls.
These requirements bring crypto businesses closer to the compliance standards applied elsewhere in Kenya’s financial system. They also address concerns that virtual assets could be used for money laundering and other financial crimes.
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Final Rules Changed Several Proposed Costs
The final regulations differ from the draft released for consultation. Most notably, the proposed 0.05% transaction fee on exchange trades and token-issuance-platform transactions was removed before the rules were proposed. The proposed 0.5% fee on successful virtual-asset offerings was also reduced to 0.25%, with a KES 30 million cap.
Capital requirements were also reduced from the draft in several categories. Stablecoin issuers, for example, now face a KES 300 million paid-up capital requirement rather than the KES 500 million proposed in March.
The changes suggest that Kenya adjusted some of the financial barriers after the consultation period while retaining the broader compliance structure.
The regulatory push is also connected to Kenya’s FATF commitments. Kenya has remained under increased monitoring since February 2024 and, as of the FATF’s June 2026 review, still had outstanding measures involving AML/CFT supervision, suspicious transaction reporting, beneficial ownership and financial investigations.
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