In its bid to explore new frontiers in trade, Kenya has officially ushered in a new era of digital finance with the signing of the Virtual Asset Service Providers Act, 2025 by President William Ruto on Wednesday.
This landmark legislation introduces the country’s first comprehensive regulatory framework for cryptocurrencies and related services, providing long-awaited clarity to an industry that has operated in legal uncertainty for years.
The Act brings crypto exchanges, digital wallet providers, brokers, and payment processors under formal regulation, requiring them to obtain licenses and comply with a range of operational standards.
It also designates two key regulators, the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA),to oversee the rapidly growing sector. Under the new law, the CBK will supervise payment processors and stablecoin issuers, while the CMA will regulate trading platforms, investment advisers, and asset managers.
Both institutions will be tasked with enforcing strict anti-money laundering rules and consumer protection measures. This includes Know-Your-Customer (KYC) requirements, transaction monitoring, and the reporting of suspicious financial activity. Non-compliance could lead to severe penalties, including fines of up to Sh 20 million (about $130,000) or imprisonment.
According to Kuria Kimani, chair of the parliamentary finance committee, the legislation is as much about innovation as it is about regulation.
Speaking to Reuters, Mr Kimani noted, “We are hoping that Kenya can now become the gateway into Africa. Most young people between aged 18 and 35 are using virtual assets for trading, payments, or investment.”
For years, platforms like Binance and Paxful operated in Kenya without clear legal standing.
The new law changes that by requiring all crypto service providers to be licensed, maintain audited financial records, and meet minimum capital and cybersecurity standards.
It also mandates that licensed platforms segregate client funds, hold sufficient reserves, and safeguard user data—offering greater security and transparency for digital asset users.
The move brings Kenya in line with countries like South Africa, which implemented a crypto licensing regime in 2023.
Analysts believe that Kenya’s regulation could attract new investment, foster innovation, and help position the country as a digital finance leader in East Africa.
Kenya is already a global leader in mobile money adoption, with over 96% of households using M-PESA, a pioneering mobile payment service. This strong digital finance culture has laid the foundation for the growing popularity of cryptocurrencies. Between July 2024 and June 2025, Kenya ranked fourth in Africa for crypto transaction volume, receiving nearly $20 billion in digital assets, according to Chainalysis.
However, the new regulatory framework is not without challenges. Smaller crypto operators and informal traders may struggle to meet the licensing costs and compliance requirements.
While the law may encourage a more secure and credible market, it could also drive consolidation, pushing out some local players who lack the resources to keep up.
Nonetheless, the Virtual Asset Service Providers Act represents a significant step forward.
It provides much-needed legal certainty, protects users, and aligns Kenya with global trends in digital asset regulation. As the sector continues to evolve, Kenya is now better positioned to harness the opportunities, and manage the risks, of the digital economy.
