Where do we go from here

Following the April 10th deadline for public participation on the Virtual Asset Service Providers (VASP) Bill 2026, the energy from our recent session at the Cooperative University still lingers. We are finally moving away from the regulatory gray area of the last few years toward a defined, professional future. However, the path forward is paved with high stakes and even higher numbers.

The Capital Threshold Crisis

The most contentious point of the session centered on the proposed capital requirements. To a startup founder in Nairobi, these figures look less like a safety net and more like a locked door. Industry insiders noted that high capital thresholds, combined with the requirement for multiple licenses before a single transaction even occurs, risk creating a market that favors only large global players.

South Africa’s regulatory positioning currently serves as a more balanced benchmark. If Kenya hopes to maintain its status as the Silicon Savannah, it must meet or exceed that pragmatism. Without a calibrated approach and a functioning regulatory sandbox, local startups face the real threat of relocating to more hospitable jurisdictions.

The 0.05% Margin Squeeze

The proposed 0.05% transaction levy acted as another lightning rod for debate. While the percentage sounds small, industry margins often hover around 0.1%. A 0.05% tax effectively slashes profitability by half. In the high-volume, low-margin world of digital asset exchanges, this burden could make Kenyan operations entirely unviable.

This aggressive taxation risks discouraging foreign direct investment, especially when compounded by the strict 33% local shareholding requirement. Such a mandate is not standard practice for VASPs or Payment Service Providers globally. Forcing this level of local equity risks pushing home-grown talent to register their companies in the UAE or the EU under frameworks like MiCA.

Technology as a Bridge

A notable highlight of the week was the rollout of a dedicated community tool, Our VASP Bill. This platform simplified dense legislative language for the average stakeholder. By making it easier for the community to digest the draft and submit feedback, the app ensured that "public participation" was a genuine dialogue rather than a mere formality.

Appreciating the Open Door

The National Treasury deserves credit for its approach to this process. By moving these conversations out of closed boardrooms and into spaces like Cooperative University, the government is acknowledging the tech community as a primary stakeholder. Hosting regional forums across the country demonstrates a level of transparency that is often missing in policy-making. This openness gives us a fighting chance to ensure the law reflects the reality of building a startup in Nairobi rather than simply mimicking Western frameworks.

The Next Steps: What to Watch For

With the feedback window closed as of April 10, the VASP Bill enters a critical refinement phase. On April 11, the National Treasury confirmed that the Multi-Agency Task Force—comprising the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA)—began reviewing the gathered memoranda.

The Task Force will spend the coming weeks refining the draft to address the specific concerns raised during the forums. Once these adjustments are finalized, the regulations will move toward Cabinet review and final gazettement. The goal remains a framework that protects the user without killing the use case. The next few months will determine if Kenya can truly become the gold standard for blockchain regulation in Africa.