Kenya Moves Ahead With Clear Rules for Cryptocurrencies

NAIROBI

Kenya is earning praise across Africa for taking early steps to bring order to one of the continent’s fastest-growing yet least-regulated sectors: digital assets.

In March 2025, the government published the Virtual Asset Service Provider (VASP) Bill, 2025, a proposed law that would for the first time establish a clear legal framework for cryptocurrency trading and related services.

Industry figures such as Larry Cooke, Binance’s Head of Legal for Africa, and Allan Kakai, Director of the Virtual Assets Chamber (VAC), have welcomed the initiative, describing it as a milestone for a region where crypto activity has often operated in legal gray areas.

“Clarity builds confidence,” Mr. Cooke said in a statement. “Kenya is showing leadership in how Africa can regulate innovation without stifling it.”

Defining Oversight and Responsibility

The draft legislation assigns oversight to two main regulators.

The Central Bank of Kenya (CBK) would supervise virtual-asset wallets and stablecoins.
The Capital Markets Authority (CMA) would regulate exchanges, token-issuance platforms, and initial coin offerings (ICOs).

To strengthen accountability, license holders would need to maintain a physical office in Kenya, not merely a registered address. Regulators say the rule would allow onsite inspections and ensure compliance with anti-money-laundering (AML) and counter-terrorism-financing (CFT) standards.

Supporters argue the requirement could help eliminate “fly-by-night” operators while anchoring legitimate businesses in the local economy.

Balancing Innovation and Tax Policy

Both Binance and the VAC have emphasized that regulation alone will not make Kenya a crypto hub; tax alignment and investor education will be equally important.

They note that predictable tax treatment for digital assets — along with training for lawyers, accountants, and regulators — will determine whether Kenya attracts sustained investment or drives innovators offshore.

Promise and Prudence

If enacted, the VASP Bill could place Kenya at the forefront of blockchain innovation in Africa, offering a model for countries that have struggled to reconcile digital-currency growth with financial stability.

By clarifying jurisdictions, tightening compliance, and insisting on real local presence, the government is signaling that responsible innovation can coexist with oversight. Analysts say the measure reflects a broader trend: African regulators seeking to balance opportunity with risk in the new digital economy.

“Kenya is building trust into the system,” said Mr. Kakai of the VAC. “That’s how you turn potential into progress.”