Kenya passes landmark law to regulate booming cryptocurrency market

• Parliament approves Virtual Asset Service Providers Bill 2025 to regulate digital assets
• Central Bank and Capital Markets Authority to share oversight of the crypto sector
• Law aims to attract investors and position Kenya as Africa’s digital finance hub

Kenya’s Parliament has passed a landmark bill this week to regulate digital assets such as cryptocurrencies, aiming to attract investment and provide a clear legal framework for a rapidly expanding market.

According to Kuria Kimani, chair of the Finance Committee in the National Assembly, the Virtual Asset Service Providers Bill 2025 was reviewed and voted on during the latest session. The text will now be submitted to President William Ruto for official promulgation.

Kuria Kimani

A dual framework under two authorities

The new legislation assigns shared responsibility to existing regulators. The Central Bank of Kenya (CBK) will handle licensing for stablecoins and other virtual assets, while the Capital Markets Authority (CMA) will supervise exchanges, brokers, and market operators.

An earlier version of the bill had proposed the creation of a new Virtual Assets Regulatory Authority (VARA) that would include representation from the crypto industry. However, this controversial provision was removed in Parliament in favor of a dual framework managed by existing agencies.

Operators will be subject to strict obligations: they must establish a physical office in Kenya, appoint a board of at least three natural persons, segregate client funds, comply with Know Your Customer (KYC) and anti–money laundering regulations, and undergo independent IT audits. Failure to comply could result in sanctions, including fines of up to 25 million Kenyan shillings ($193,500) or imprisonment for up to five years. Operators already active in the market will have a one-year transition period to comply with the new rules.

A strategic bet for investment

Kenyan authorities justify this regulatory shift as necessary to provide legal certainty for investors and fintech start-ups. The chair of the Finance Committee mentioned that discussions have already begun with platforms such as Binance and Coinbase to encourage them to establish operations in the region. “We are hoping that Kenya can be now the gateway into Africa,” he said.

The bill also aims to position Kenya among the first African countries with a comprehensive crypto framework, alongside South Africa and Mauritius. It could further strengthen the country’s credibility with international institutions, particularly in its strategy to exit the Financial Action Task Force (FATF) grey list.

This reform comes amid strong cryptocurrency adoption in Kenya. About 10.71% of the Kenyan population, or nearly 6.1 million people, currently hold cryptocurrencies, according to estimates from the platform Triple-A.

In the 12-month period ending in June 2024, users conducted transactions worth about 426.4 billion Kenyan shillings ($3.3 billion) in stablecoins.

At the regional level, the cryptocurrency market in sub-Saharan Africa grew by 52% year-on-year, reaching more than $205 billion between July 2024 and June 2025, according to Chainalysis, which ranks Kenya among the countries with the highest adoption rates worldwide.

The rise in cryptocurrency use among young people aged 18 to 35—as a means of payment, investment, or transaction—is cited as one of the main drivers of reform. Kenya is also building on its long-standing leadership in mobile financial services, particularly through M-Pesa, to support the integration of new financial technologies.

Challenges ahead

Observers note that the success of the project will depend largely on the effective implementation of the law, particularly the definition of capital thresholds, solvency criteria, licensing costs, and the balance between regulatory rigor and innovation. Smaller players in the sector could face difficulties if compliance conditions prove too demanding.

Additionally, the provisions requiring a local physical presence have drawn criticism. Some argue that they could deter purely digital operators whose infrastructure is inherently decentralized. Nigeria faced a similar issue with Binance, which engaged in a high-profile dispute with local authorities over the absence of a physical office in the country.

In 2024, two Binance executives—Nadeem Anjarwalla and Tigran Gambaryan—were detained on charges ranging from manipulation of the naira to tax violations. The company, which claimed to have a “significant economic presence” despite its offshore status, demanded $79.5 billion in economic damages and $2 billion in unpaid tax claims.