Kenya's crypto sector pushes back as VASP rules demand better compliance

Between July 2024 and June 2025, Kenyans received approximately 19 billion USD in crypto inflows, making Kenya one of the most active cryptocurrency markets in Africa. However, the cryptocurrency market remained largely unregulated until the end of 2025.

All crypto activity took place without a single licensed operator, formal consumer protection, or legal framework. But now, Kenya’s digital assets space is entering a more regulated era as authorities implement a framework for virtual asset operators under the VASP Act that was signed into law in 2025. 

The Kenyan Treasury has released the draft VASP Regulations 2026, which will govern the implementation of the act. The purpose of the regulation is to enhance the supervision of exchanges, brokers, tokenization platforms, and payment-related digital asset services. 

Kenyan authorities argue that stronger supervision could help formalize the sector and reduce risks to the financial system as adoption expands across East Africa. 

“We are looking at how best we can support this market to grow in an orderly, safe, and efficient manner while ensuring consumer protection and market integrity,” said Capital Markets Authority deputy director for market development Justus Agoti.

As details of the VASP regulations 2026 emerge, industry players are pushing back hard, warning that the compliance requirements could reshape who gets to participate in the market. 

Crypto participants have argued that the proposed compliance structure could increase operational costs, create licensing barriers for smaller firms, and shift competitive advantages toward larger international exchanges with stronger capital positions.

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The VASP regulation in Kenya 2026 and what it entails

The VASP Act was signed by the President of Kenya, William Ruto, in October 2025 and entered into force on 4 November 2025. The Act establishes the legal foundation for crypto regulation in Kenya. It also names the regulators, defines the categories of virtual asset service providers, and sets out the obligations around licensing and anti-money laundering compliance. 

However, the VASP Act is a parent law, and cannot be implemented without a separate set of rules to guide its operation. The National Treasury released the draft VASP Regulations Kenya 2026, developed by a Multi-Agency Task Force comprising the CBK and CMA. 

The VASP Regulations 2026 provide for a dual-regulator model, in which the Capital Markets Authority and the Central Bank of Kenya are responsible for overseeing VASPs. 

Under the regulation, the CMA will oversee crypto exchanges, tokenization platforms, brokers, dealers, and investment-related digital asset activities. The functions of the Central Bank of Kenya will include overseeing stablecoin issuers and payment-focused virtual asset businesses that interact more directly with the financial system.

Both authorities play distinct roles, but their ultimate aim is the same: to decrease the risk of fraud, increase transparency, and place Kenya’s digital assets regulation under the formal financial system's watch. The division is intended to allow the regulator to address the distinct risks of different crypto businesses from the most suitable authority. 

Under the draft rules, only local companies are eligible for direct licensing, while foreign companies will require a compliance certificate to qualify. The legislation also mandates that every virtual asset service provider maintain a physical presence within Kenya before qualification for licenses. 

The regulation also imposes anti-money laundering procedures, customer verification requirements, reporting obligations, and capital adequacy standards, among other compliance conditions. 

Beyond structure, the regulations introduce specific financial thresholds. The draft rules propose that stablecoin issuers fulfill a minimum paid-up capital requirement of 500 million KSh, which is about 3.86 million USD. It also mandates providers to separate client funds from operational accounts. 

Why is the industry pushing back on Kenya's cryptocurrency compliance? 

The debate around the regulation centers on whether the draft VASP Regulations 2026 strike the right balance between protection and practicality.

Most crypto industry participants in Kenya are concerned that the proposed taxes and high licensing requirements under the Finance Bill 2026 and the draft VASP Regulations could favor large foreign firms at the expense of local startups. 

The pushback is therefore not about resisting CMA and CBK oversight, but about ensuring that implementation does not consolidate market power among better-funded participants. 

The Virtual Asset Association of Kenya (VAAK) has also warned that the capital demands in the draft regulations, plus insurance and compliance costs, could drive startups out of the formal market. 

VAAK is concerned that the consumer protection goals the rules are meant to achieve may be impossible if crypto traders move toward unregulated offshore platforms. 

Implications for the forex and digital assets market

Changes in Kenya’s digital assets regulatory environment may have implications for traders monitoring currency markets, fintech trends, and risk sentiment across emerging markets. Especially as the crypto markets influence capital flows, investor sentiment, and digital payment activity in several African economies.

These changes in Kenya may impact all trading volumes associated with fintech companies and regional payment systems. If parts of the cryptocurrency industry are formalized, it could help build trust among investors in Kenya's digital financial landscape.

However, the stricter rules may also reduce short-term market activity if smaller firms shut down operations during the licensing transition period.

What traders may watch out for

Traders interested in the crypto market may monitor the following: 

• Licensing timelines and the number of firms that successfully obtain approval under Kenya’s cryptocurrency compliance regime.
• How the Central Bank of Kenya approaches stablecoin oversight and payment-related digital asset activity.
• Whether international exchanges increase their presence in Kenya following the regulatory changes.
• If stricter compliance rules affect transaction volumes or investor sentiment toward Kenya’s digital finance sector.

Conclusion 

Kenya’s cryptocurrency compliance regulation is now in its final stage. Authorities expect to publish final regulations in the coming weeks, especially with the close of public consultation in April 2026. 

The regulation of the cryptocurrency markets may help determine whether Kenya can balance oversight with the continued growth of the digital asset economy. So the VASP Regulations 2026 are not only a domestic policy matter but may also affect Kenya's standing in international financial systems.

For more information on Kenya’s digital assets regulation, visit Exness Insights or the Exness Blog page.