The Virtual Asset Service Providers Act brings licensing, consumer protection and AML oversight, positioning Kenya as a regional hub for compliant digital asset innovation.
Kenya has taken a decisive step toward regulating its fast-growing digital asset economy with the introduction of the Virtual Asset Service Providers (VASP) Act, 2025, a landmark piece of legislation that establishes a clear legal and supervisory framework for cryptocurrencies and related services. The law, which came into force in November 2025, is widely seen as a turning point for a market that had previously operated in a regulatory grey zone despite widespread public adoption and increasing institutional interest.
The new framework formally recognises virtual assets as digitally transferable representations of value, including cryptocurrencies, stablecoins and tokenised financial instruments. At the same time, it draws clear boundaries by excluding central bank digital currencies, mobile money balances and purely collectible digital items from its scope. This distinction provides clarity for both regulators and market participants, reducing uncertainty that has long hindered large-scale investment and innovation in the sector.
A central pillar of the VASP Act is the mandatory licensing of all Virtual Asset Service Providers, including exchanges, wallet operators, brokers, custodians and token issuers. Only companies limited by shares may apply, and applicants must meet strict requirements on capital adequacy, corporate governance, cybersecurity, and the fitness and propriety of directors and senior management. This move is designed to professionalise the sector and ensure that only well-structured and transparent firms can operate.
Regulatory oversight will be shared between two key institutions. The Capital Markets Authority (CMA) will supervise trading platforms, investment-related services and token offerings, while the Central Bank of Kenya (CBK) will regulate wallet providers, payment processors and stablecoin issuers. This dual-regulator model aims to balance financial market integrity with monetary and payments system stability.
The Act also aligns Kenya with global standards on anti-money laundering and counter-terrorist financing. Licensed VASPs are required to implement robust customer due-diligence procedures, transaction monitoring systems and reporting obligations. Client assets must be segregated from company funds, audited financial statements must be submitted regularly, and anonymity-enhancing services are restricted to improve traceability and consumer protection.
Industry response has been largely positive. More than 50 digital asset companies have already come together under the Virtual Asset Association of Kenya to engage with regulators and support the practical rollout of the new rules. For many stakeholders, the legislation signals that Kenya is serious about building a safe, credible and innovation-friendly digital finance ecosystem.
With a young, tech-savvy population and high mobile penetration, Kenya is well positioned to become a regional hub for regulated virtual asset activity. The VASP Act not only strengthens investor confidence and consumer safeguards, but also lays the foundation for sustainable growth, cross-border partnerships and the integration of blockchain technology into the broader financial system.
