Crypto Overview in Kenya

Regulatory data is for informational purposes only and may not reflect the most current legal developments. Always consult qualified professionals before making decisions.

Legal Classification and Regulatory Framework

Cryptocurrency Status

Kenya enacted the Virtual Asset Service Providers Act 2025 (Act No. 20 of 2025), which was signed into law on October 15, 2025 and commenced on November 4, 2025. The Act defines virtual assets as digital representations of value that can be digitally traded, transferred, and used for payment or investment purposes. Virtual assets are legal to own and trade in Kenya but are explicitly not recognized as legal tender. The Act excludes digital representations of fiat currencies, securities regulated under existing law, in-game currencies confined to closed ecosystems, central bank digital currencies (CBDCs), and non-fungible tokens without payment or investment utility.

Prior to this legislation, Kenya’s regulatory posture was limited to a December 2015 cautionary public notice from the Central Bank of Kenya (CBK) warning citizens that virtual currencies were unregulated and that banks had been instructed not to facilitate related transactions. The VASP Act represents a fundamental shift from that warning-only posture to a formal licensing and supervisory regime. Kenya is a member of the East African Community (EAC) but there is no EAC-wide virtual asset framework; the VASP Act is a purely domestic instrument and is being watched by neighbouring jurisdictions as a potential regional model.

Tax Treatment

Kenya’s crypto tax framework changed significantly on July 1, 2025, when the Finance Act 2025 repealed the controversial 3% Digital Asset Tax (DAT) that had been introduced by the Finance Act 2023 under Section 12F of the Income Tax Act. The DAT had applied to the gross value of every transfer or exchange of virtual assets and was widely criticized for taxing capital rather than profits. It replaced the DAT with a 10% excise duty on fees charged by VASPs on virtual asset transactions, applicable only to service and transaction fees and not the total transaction value.

For individuals, crypto profits are subject to progressive income tax rates of 10% to 35%. Mining, staking, and airdrop rewards are classified as business income. Companies pay a flat 30% corporate tax rate on crypto-related profits, and standard capital gains tax rules apply to virtual assets held as investments. VASPs must register with the Kenya Revenue Authority (KRA), maintain local bank accounts, and remit excise duty by the 20th of the following month. The Finance Bill 2026, tabled in Parliament on April 30, 2026, proposes to implement the OECD Crypto-Asset Reporting Framework (CARF), requiring VASPs to file annual returns with the KRA.

Regulatory Oversight

Kenya adopted a dual-regulator model under the VASP Act. The Central Bank of Kenya (CBK, Benki Kuu ya Kenya) oversees virtual asset wallet providers, payment processors, and stablecoin issuers, focusing on payment system safety and reserve adequacy. The Capital Markets Authority (CMA, Mamlaka ya Masoko ya Mitaji) regulates virtual asset exchanges, digital asset brokers, investment advisors, fund managers, and tokenization platforms, with responsibility for market conduct and client-asset protection.

The Financial Reporting Centre (FRC), established under the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA) 2009 and operational since April 2012, serves as Kenya’s AML financial intelligence unit. Under the VASP Act, VASPs are now designated as reporting institutions to the FRC, triggering KYC, customer due diligence, suspicious transaction reporting, record-keeping, and Travel Rule compliance obligations. The KRA handles tax collection and enforcement. The Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Act 2025 further tightened these obligations, raising maximum penalties to KES 30 million and setting a March 2026 compliance deadline.

Business Environment

Banking Relationships

Banking access for crypto businesses in Kenya has historically been difficult. In the notable BitPesa case (the company is now known as AZA Finance), Safaricom suspended M-Pesa services because BitPesa was operating a Bitcoin-based money remittance business without CBK authorization. Banks generally applied blanket derisking policies toward crypto-related businesses throughout the pre-regulation period.

The VASP Act is expected to shift this dynamic by moving banks from blanket derisking to risk-based onboarding of licensed VASPs. Draft implementing regulations mandate that all VASPs open and maintain a bank account in Kenya, and stablecoin issuers must hold at least 30% of customer funds in segregated accounts within Kenyan commercial banks. M-Pesa remains widely used as an on-ramp and off-ramp for retail crypto purchases across exchanges operating in Kenya.

Innovation Support

The CMA operates a Regulatory Sandbox, launched in May 2019, which allows live testing of innovative capital markets products under a less restrictive regulatory regime for up to 12 months. The programme has attracted significant blockchain and crypto applications. Notable admissions include Yeshara Tokens Limited and OwnMali, both focused on blockchain-enabled real estate tokenization. Six enterprises have graduated from the programme to date. The VASP Act itself includes a dedicated sandbox provision for innovative virtual asset products, extending this framework into the new regulatory era.

Kenya’s broader technology strategy includes Konza Technopolis, a 5,000-acre smart city project under Kenya Vision 2030 serving as a hub for blockchain, AI, and IoT experimentation. The government has also piloted blockchain for land registry and digital identity. In December 2025, more than 50 crypto firms formed the Virtual Asset Association of Kenya (VAAK) to engage the CBK and CMA on implementing regulations.

Crypto License in Kenya

The VASP Act 2025 created Kenya’s first comprehensive VASP licensing framework, administered jointly by the CBK and CMA depending on the activity category. As of May 2026, no VASP licenses have been issued: licensing cannot begin until the Cabinet Secretary of the National Treasury gazettes implementing regulations. The draft Virtual Asset Service Providers Regulations 2026 were published for public consultation in March 2026, with a comment deadline of April 10, 2026 and nationwide public forums held from March 30. Existing VASPs that were operating before November 4, 2025 have until November 4, 2026 to achieve full licensing compliance.

Licensing Requirements

To obtain a license, applicants must be a company limited by shares incorporated under Kenya’s Companies Act. Foreign companies must first obtain a compliance certificate before applying. Core requirements include: a minimum of three directors who each pass a “fit and proper” assessment by the relevant regulator; a physical office maintained in Kenya; capital adequacy and solvency thresholds set by the CBK or CMA for the relevant activity category; and client fund segregation, with stablecoin issuers required to hold at least 30% of customer funds in segregated accounts at Kenyan commercial banks.

Operational obligations include independent IT security audits, incident reporting within prescribed timeframes, cybersecurity standards aligned with CBK/CMA guidance, insurance cover, and continuous AML/CFT compliance including Travel Rule mechanics. Penalties for unlicensed operation reach fines of up to KES 20 million and up to five years’ imprisonment under the VASP Act. The AML Amendment Act 2025 adds an additional layer with fines up to KES 30 million for AML non-compliance.

Authorized Activities

The Act defines activity-specific license categories. CBK-regulated categories cover: virtual asset wallet provision, virtual asset payment processing, and virtual asset offering involving stablecoin issuance. CMA-regulated categories cover: virtual asset exchanges, virtual asset brokerage, virtual asset investment advisory, virtual asset fund management, and virtual asset offering involving initial coin offerings, tokenization platforms, and token issuance platforms.

Each license category carries specific prudential and conduct requirements. The Act explicitly excludes fiat currency representations, securities already regulated under existing Kenyan capital markets law, closed-loop gaming tokens, CBDCs, and NFTs with no payment or investment function from the VASP regime.

Application Process and Timeline

The formal application window will open only after the Cabinet Secretary publishes final implementing regulations under the VASP Act. As of May 2026, those regulations are in the public consultation phase following the March 2026 draft release. Prospective applicants are advised to monitor the National Treasury, CBK, and CMA official channels for the gazette notice triggering the formal application process.

Once open, applications are expected to require: a completed application form with fit-and-proper disclosures for all directors; certified constitutional documents and proof of Kenyan incorporation; a business plan and financial projections; evidence of capital adequacy; an AML/CFT compliance manual; an IT security assessment; and proof of a Kenyan bank account. The CBK and CMA have not published indicative processing timelines. Foreign applicants must additionally obtain the compliance certificate referenced in the Act before applying.

Market Characteristics

Adoption Patterns

Kenya is East Africa’s largest digital asset market and ranks 21st globally on the Chainalysis Global Crypto Adoption Index. Approximately six million Kenyans, representing around 10% of the population, actively use cryptocurrency. Between July 2024 and June 2025, Kenya received approximately $19 billion in crypto inflows according to Chainalysis, and the country ranks as the fourth-largest recipient of stablecoins in Africa. The country’s well-established mobile money ecosystem, anchored by M-Pesa, has created a population comfortable with digital financial services and provides accessible on-ramp and off-ramp infrastructure for crypto transactions.

Industry Focus

Kenya’s crypto industry reflects the country’s strengths in mobile payments and fintech. M-Pesa integration with crypto platforms provides broad retail access. Cross-border remittances remain a prominent use case, and stablecoins are increasingly used for payments and value transfer. The CMA sandbox has attracted blockchain real estate tokenization projects, and the VASP Act’s own sandbox provision is expected to further support tokenization and DeFi-adjacent products. The formation of the Virtual Asset Association of Kenya (VAAK) in December 2025, backed by more than 50 firms, signals a maturing industry seeking coordinated engagement with regulators.

Regulatory Evolution

Kenya was placed on the FATF grey list (Jurisdictions Under Increased Monitoring) in February 2024, partly due to the absence of a formal VA/VASP regulatory framework. The listing also contributed to Kenya being added to the EU’s High-Risk AML list in June 2025, which requires EU-based financial institutions to apply enhanced due diligence when dealing with Kenyan counterparties. Both listings have increased the urgency of Kenya’s regulatory reform agenda.

The VASP Act 2025 and the AML Amendment Act 2025 were enacted to address the identified FATF deficiencies. The High Court of Nairobi issued a landmark data protection ruling on May 5, 2025, ordering Worldcoin (Tools for Humanity) to permanently delete all biometric data collected from Kenyan users for its iris-scanning crypto identity programme, finding violations of the Data Protection Act 2019. The Office of the Data Protection Commissioner (ODPC) confirmed in January 2026 that the deletion had been completed. Kenya’s FATF grey list status was maintained at the February 2026 plenary, but the legislative reforms enacted through 2025 are expected to support its case for removal. Within the East African Community, Kenya’s VASP Act positions it as the most advanced VASP regulator in the region.