Treasury cuts crypto capital requirements by up to 40 percent. The harder problem just moved to regulators

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Kenya's National Treasury has cut minimum capital requirements for crypto firms by up to 40 percent in newly gazetted regulations, delivering the concession the Virtual Assets Association of Kenya (VAAK) spent months lobbying for. The Virtual Asset Service Providers Regulations, 2026, published under Legal Notice No. 134, bring the paid-up capital requirement for stablecoin issuers down to Sh300 million from the Sh500 million originally proposed. It's a real concession, and it doesn't touch the part of this framework that was always going to be the harder problem.

Treasury didn't cut every category equally. Stablecoin issuers saw the biggest concession, some categories were split into much lower tiers, and investment advisory licences dropped to zero:

• Stablecoin issuers: Sh300 million paid-up capital; liquid capital of Sh60 million or 100 percent of liabilities for at least 30 days, whichever is higher
• Virtual asset wallet providers: Sh150 million paid-up capital; liquid capital of Sh30 million or 100 percent of liabilities for at least 30 days, whichever is higher
• ICO providers: Sh20 million paid-up capital; liquid capital of Sh4 million or 8 percent of liabilities, whichever is higher
• Tokenisation businesses: Sh10 million paid-up capital; liquid capital of Sh2 million or 8 percent of liabilities, whichever is higher
• Investment advisory licences: no paid-up or liquid capital required

It's clear this opens the door to individuals and small firms that had no realistic path to a VASP licence under the original draft. Whether regulators can effectively supervise the businesses that now qualify is a different question.

Treasury Cabinet Secretary John Mbadi didn't concede everything. VAAK chairman Peter Onyango had pushed Treasury to reconsider capital requirements, licence fees, transaction fees, and compliance costs together, arguing the combined burden would keep serious international operators out of Kenya. Treasury moved on exactly one line item on that list. The annual licence fee for stablecoin issuers stays at up to Sh2 million, unchanged from the original draft. Treasury made it cheaper to qualify for a licence. It didn't make running one much cheaper.

A lower capital bar means more firms can apply, which pushes the harder problem onto the regulators rather than off them. Supervision here will be a joint job: the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) license and oversee VASPs together under the Act. A wider applicant pool with the same enforcement capacity makes that job harder, not easier. Expect the CMA to lean harder on anti-money laundering and consumer protection rules. Cybersecurity requirements will likely tighten too.

Tax exposure is the other pressure point. Unregistered activity tends to climb when entry gets cheaper, and the Kenya Revenue Authority (KRA) has every reason to watch transaction volumes closely. A crackdown on unlicensed operators usually increases compliance costs for the firms already following the rules.

The lower capital bar redistributes compliance costs rather than eliminating them. Firms that already run licensed financial infrastructure, Safaricom and M-PESA foremost among them, are best positioned to absorb the load. They already carry the banking relationships and compliance teams a new AML or consumer-protection push would demand. Lower capital requirements shift the competitive advantage toward firms that already know how to manage compliance.

Kenya's move gives Uganda and Tanzania a live regional example to weigh, though neither is starting from zero. Tanzania already taxes digital assets and piloted a stablecoin sandbox in May 2026, while Uganda runs its own payment-licensing regime outside a dedicated VASP law. None of that makes a Nairobi-issued VASP licence portable. It still doesn't allow a firm to operate automatically in Rwanda or Tanzania. Reducing that fragmentation is one of the goals of the East African Community's Cross-Border Payment System Masterplan, approved in 2025. Until then, founders building across the region still face separate legal and compliance costs in each market.

None of this settles what the capital cut is actually for. Kenyans already use stablecoins to pay for imports and send remittances from the diaspora, and companies use them to move earnings across borders without local banking fees and delays. A lower capital bar makes it easier to serve that real activity through licensed operators. It also makes it easier to launch another speculative trading platform. Which outcome dominates depends on whether the CMA and CBK back this relief with clear operational guidance, and whether VAAK's members build businesses around real use cases rather than speculation. The capital bar was never really the barrier in Kenya's crypto market. Enforcement capacity is, and Treasury didn't touch that.