Presidential Assent transforms VASP Bill, 2025 into an Act

The act, now slated for publication in the Kenya Gazette, formally establishes a regulatory framework for the country’s burgeoning digital‑asset sector.

The legislation designates the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) as joint lead regulators, while empowering the Cabinet Secretary for the National Treasury to issue subsidiary regulations. Those rules will cover a wide spectrum of activities, from stablecoin issuance and tokenisation of real‑world assets to initial coin offerings (ICOs), security token offerings (STOs), and the operation of exchanges and trading platforms. The act also sets out capital, solvency and insurance requirements, consumer‑protection safeguards, advertising standards, cybersecurity protocols and mandatory AML/CFT/CPF compliance.

Kenya has been positioning itself as East Africa’s fintech hub for years, but the lack of clear guidance on crypto‑related services has left many startups navigating a legal gray area. By assigning both the CBK and CMA oversight, the government aims to balance monetary‑policy concerns with capital‑market development, a dual‑track approach that mirrors regulatory models in jurisdictions such as Singapore and Switzerland.

Industry participants have welcomed the move as a “historic step” for the virtual‑asset economy. “Having a concrete legal framework removes uncertainty for investors and innovators alike,” said James Mwangi, CEO of Nairobi‑based blockchain incubator BitMango. “We can now design products—whether it’s a stablecoin pegged to the shilling or a tokenised real‑estate offering—with confidence that the rules are set.”

The Treasury’s authority to issue detailed regulations means the government will soon address practical questions that have long lingered. Drafts are expected to outline licensing thresholds for exchanges, define the capital reserves required of custodial service providers, and lay out reporting obligations for AML and counter‑terrorism financing. Stakeholders anticipate a public consultation period in the coming weeks, giving fintech firms, legal counsel, and consumer groups a chance to weigh in before the final rules are codified.

Kenya’s move arrives as Africa’s crypto market continues its rapid expansion. According to data from Chainalysis, the continent saw a 70 % year‑on‑year increase in crypto adoption in 2024, driven largely by cross‑border remittances and a youthful, mobile‑first population. By formalising the sector, Kenya hopes to capture a larger share of that growth, attract foreign investment, and foster homegrown innovation in tokenised assets and decentralized finance.

The VASP Act also signals a broader regulatory shift across the region. South Africa’s recent amendments to its Financial Sector Conduct Act and Nigeria’s licensing framework for crypto exchanges illustrate a continental trend toward clearer oversight. As regulators converge on common standards—particularly around AML/CFT—African markets could become more attractive to global institutional players wary of compliance risk.

For now, the focus turns to the implementation timeline. The CBK has indicated that it will establish a dedicated Virtual Assets Unit within its supervisory department, while the CMA plans to integrate VASP oversight into its existing securities licensing processes. Both agencies have pledged to work closely with the Treasury to ensure that the subsidiary regulations are both robust and adaptable to the fast‑evolving digital‑asset landscape.