Kenya Passes Landmark Bill to Regulate Crypto Industry, Ending Years of Uncertainty

Kenya has taken a historic step toward formalizing its fast-growing digital asset market with the passage of the Virtual Asset Service Providers Bill, 2025, creating the country’s first comprehensive regulatory framework for cryptocurrencies and related businesses.

According to a local report on October 13, the bill—now awaiting President William Ruto’s assent—requires every virtual asset service provider (VASP) operating in Kenya to obtain a license and comply with strict oversight from both the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA).

“This is a landmark moment for Kenya’s financial ecosystem. It provides clarity, promotes innovation, and protects consumers from fraudulent digital schemes.”

The move brings long-awaited legal recognition to a sector that has operated in a regulatory gray area for years, despite Kenya’s ranking among Africa’s top nations in grassroots crypto adoption.

The new law is expected to boost investor confidence, ensure compliance with global standards, and establish a foundation for responsible innovation in blockchain and digital assets.

Defining the Crypto Players

Under the new framework, a Virtual Asset Service Provider is defined as a company limited by shares, whether locally incorporated or a foreign entity registered under Kenyan law, that offers crypto-related services such as trading, custody, or wallet operations.

Licensed firms will now be required to comply with a suite of operational standards designed to strengthen market integrity and consumer protection. These include maintaining secure custody of client assets, holding insurance coverage and local bank accounts, and implementing conflict-of-interest policies. Companies must also keep detailed transaction and customer records to ensure transparency and accountability.

The CBK and CMA have been granted broad powers to inspect, supervise, and sanction noncompliant operators. This coordinated oversight brings Kenya’s crypto regulation in line with international best practices and addresses long-standing concerns over consumer safety and market manipulation.

In a major policy shift, the bill also extends anti-money laundering (AML) and counter-financing of terrorism (CFT) obligations to the digital asset sector. This alignment with global standards—such as those set by the Financial Action Task Force (FATF)—is expected to enhance transparency and reduce illicit activity in crypto transactions.

By embedding these principles within its domestic regulatory framework, Kenya is signaling its readiness to engage responsibly with the global financial system while protecting its citizens from exploitation.

Grassroots Adoption Meets Institutional Oversight

Kenya’s top-down regulatory approach arrives at a time when crypto usage is already flourishing at the grassroots level. In Nairobi’s Kibera neighborhood, a community-driven “Bitcoin circular economy” has reportedly processed more than 2,000 microtransactions, demonstrating how local innovation continues to shape the country’s financial future.

Platforms like Machankura, which allows users to send and receive Bitcoin through USSD codes without an internet connection, are expanding access to digital currencies in remote areas. Meanwhile, local innovators are building bridges between decentralized finance and the country’s ubiquitous M-Pesa mobile money ecosystem, further integrating blockchain into Kenya’s financial fabric.

This synergy between institutional oversight and community adoption is positioning Kenya as one of Africa’s most dynamic and inclusive crypto environments.

Positioning Kenya as a Regional Leader

Once signed into law by President Ruto, Kenya will join South Africa, Nigeria, and Mauritius as one of the few African nations with a formal digital asset regulatory regime. The bill is widely seen as a pivotal step toward attracting global crypto investment, enhancing consumer trust, and positioning Kenya as East Africa’s blockchain innovation hub.

By combining its strong grassroots crypto culture with clear institutional oversight, Kenya is setting the stage for a more secure, transparent, and forward-looking digital economy—one that could serve as a model for the rest of the continent.