Kenya ushers crypto into the regulatory fold with new bill

Kenya has established its first legal framework for the crypto industry, compelling every virtual asset service provider operating within its borders to seek a formal license. This ends a prolonged period of regulatory uncertainty for the sector.

Summary

• Kenya’s parliament passed the Virtual Asset Service Providers Bill, 2025, creating the country’s first crypto licensing framework.
• The Central Bank of Kenya and Capital Markets Authority will jointly oversee exchanges, wallet providers, and related firms.
• The law introduces consumer protection, AML standards, and operational safeguards as Kenya’s grassroots crypto use continues to expand.

According to a local report on Oct. 13, the Kenyan parliament has passed the landmark Virtual Asset Service Providers Bill, 2025, sending it to President William Ruto for his anticipated assent.

The legislation mandates that any entity offering crypto services—from exchanges to wallet providers—must obtain a license and submit to oversight from a coordinated duo of existing regulators: the Central Bank of Kenya and the Capital Markets Authority.

Kenya’s move toward crypto oversight amid grassroots adoption

The bill provides a clear definition of who falls under its purview. A Virtual Asset Service Provider is defined as a company limited by shares, either locally incorporated or a foreign entity registered under Kenyan law, that is licensed to offer crypto services.

For licensed entities, the framework mandates a suite of operational safeguards designed to instill trust. VASPs will be required to maintain robust protections for client assets, secure insurance coverage, and hold bank accounts within Kenya. They must also implement formal conflict-of-interest policies and keep meticulous transaction records.

To enforce these standards, the CBK and CMA are granted broad powers to inspect, supervise, and sanction any noncompliant operators. The framework also explicitly extends anti-money laundering and counter-financing of terrorism obligations to the crypto sector, aligning Kenya with critical global financial security standards.

This top-down regulatory push arrives as a bottom-up crypto economy is already taking root. The potential of this synergy is visible in places like Nairobi’s Kibera neighborhood, where a community-run “Bitcoin circular economy” has already processed over 2,000 small transactions.

Innovations like the USSD platform Machankura allow users with basic mobile phones to transact in Bitcoin without an internet data connection, while local platforms are seamlessly integrating with the ubiquitous M-Pesa mobile money system.

Upon President Ruto’s assent, Kenya will join a small group of African pioneers with established digital asset frameworks, including South Africa, Nigeria, and Mauritius.