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| Foto: into law by President William Ruto |
VISTORBELITUNG.COM,NAIROBI—Kenya has officially entered a new era of digital finance with the signing of the Virtual Asset Service Providers (VASP) Bill, 2025 into law by President William Ruto. The landmark legislation establishes a comprehensive legal and regulatory framework for cryptocurrencies and other digital assets, a move highly anticipated by both local and international investors.
The newly enacted law, which had been passed by the National Assembly earlier this month, is poised to bring clarity and stability to Kenya's rapidly growing virtual asset market. It represents a significant step towards safeguarding investors, combating financial crimes, and bolstering the country's reputation as a secure hub for fintech innovation in Africa.
A key feature of the VASP Act is the introduction of a dual regulatory framework, which assigns oversight responsibilities to existing financial institutions:
Central Bank of Kenya (CBK): Will be responsible for the licensing and supervision of stablecoins and other virtual assets used as a medium of exchange.Capital Markets Authority (CMA): Will oversee the licensing of crypto exchanges, brokers, trading platforms, and the regulation of Initial Virtual Asset Offerings (IVAOs), treating them similarly to traditional securities.
This structure aims to utilize the existing expertise of Kenya's established financial watchdogs, a departure from earlier proposals that suggested creating an entirely new, standalone regulatory authority.
The legislation places stringent obligations on all Virtual Asset Service Providers (VASPs) including crypto exchanges, wallet providers, and custodians to comply with global Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) standards.
Under the new law, VASPs are required to:
• Obtain a mandatory operating license from the designated regulator.
• Maintain a physical office within Kenya.
• Implement robust Know Your Customer (KYC) procedures.
• Segregate client funds from their operational capital to protect investors.
• Report suspicious transactions above a specified threshold.
Non-compliance could result in severe penalties, including hefty fines of up to KSh 25 million (approximately $194,000) or imprisonment for up to five years. Operators currently active in the market will be given a one-year transition period to align with the new regulatory requirements.
The VASP Act is seen as a crucial measure to enhance investor confidence and provide a safe environment for both consumers and innovators. It is also a direct action toward addressing concerns raised by the Financial Action Task Force (FATF), which had placed Kenya on its grey list for deficiencies in its anti-financial crime framework. By adopting the international best practices recommended by FATF, the country aims to exit the list and attract greater Foreign Direct Investment (FDI).
"This law signals a clear commitment from Kenya to embrace digital finance responsibly," commented an industry analyst. "By providing certainty, the government has laid the foundation for global crypto platforms to establish legitimate operations here, potentially making Kenya a regional blueprint for regulated digital asset markets."
The enactment of the VASP Bill firmly places Kenya alongside South Africa as a leader in comprehensive crypto regulation on the African continent, paving the way for further innovation and financial inclusion through blockchain technology.