Kenya is in the advanced stage of introducing a regulatory framework for crypto. Kenya’s National Treasury has submitted a bill to the National Assembly to regulate the activities of Virtual Asset Service Providers (VASPs) in the country. While other African countries, such as Mauritius and South Africa, have advanced the regulation and adoption of cryptocurrencies, Kenya still lags. Virtual Asset Service Providers Bill 2025 Lands Before the National Assembly Kenya announced it will regulate digital assets by introducing the Virtual Asset Service Providers Bill 2025 (VASP) . The Virtual Asset Service Providers Bill is Kenya’s first comprehensive legislation regulating the overall cryptocurrency section. The Bill marks a vital step in Kenya’s journey to embrace cryptocurrency and the government’s first genuine efforts to bring clarity and control to this fast-growing and unregulated part of the country’s financial system. Kenya’s National Treasury will spearhead the VASP Bill and aims to introduce a structured regulatory framework. The VASP Bill requires all VASPs to be licensed by designated regulators, including the Central Bank of Kenya and the Capital Markets Authority. In addition to its licensing requirements, the VASP Bill 2025 dictates that licensed exchanges must open physical offices or a branch in Kenya while introducing anti-money laundering and counterterrorism (AML/CTF) measures in place. Under the Bill’s AML/CTF requirements, crypto firms will likely collect information from customers transacting on their platform and disclose it with relevant government agencies. Under the VASP Bill 2025, only licensed platforms and entities may issue initial coin offerings (ICOs) and can only do so after they have secured regulatory approval. Kenya’s Crypto Regulation Over the Years Kenya appears to be reversing its former opposition to crypto and digital assets. In 2015, the country introduced a “soft ban” on crypto and warned financial institutions to refrain from engaging in the sector. The Central Bank of Kenya cited known risks associated with crypto, including money laundering, loss due to lack of regulation, and concerns over the underlying assets of digital assets. In 2022, the Central Bank of Kenya (CBK) underscored its views on Bitcoin and digital assets with the CBK governor, Patrick Njoroge, describing the calls to convert the country’s reserves into crypto as outright “ craziness .” Njoroge reiterated that he believes that digital assets are volatile, but apart from that, they simply do not solve any real-life issues. Despite the government’s views on crypto, many Kenyans rely on it. Speaking of its popularity, the CBK governor continues questioning the benefit of cryptocurrencies for the Kenyan economy. In a video posted to YouTube, the Governor said: “In our economy what problem are they resolving? Are they better vehicles for let’s say payments, transactions? And the answer is no. Are they better in terms of …. security more than a bank account? And the answer is no.” Njoroge added; “I do know you are under a lot of pressure from some of these people that are pushing these things. Because for them it is good. I can assure you I have a lot of people that are pushing to put our reserves in bitcoin.” Parliamentary Committee Passes Crypto Tax Bill At the time, while crypto adoption increased in large parts of the world, Njoroge maintained he had no plans to implement Bitcoin in Kenya. The Kenyan government did, however, change its position. In 2023, the National Assembly Committee approved Kenya’s Capital Markets (Amendment) Bill aimed at regulating and taxing the burgeoning industry in the country. The Kenyan government also introduced a contentious 3% digital asset tax (DAT) as part of its amended Finance Act 2023. At a glance, the regulation imposes a 3% tax on income earned through the transfer or exchange of digital assets. The DAT again appeared in the VASP 2025 Bill, sparking heated public debate. According to CNBC Africa reporting, regulators argue the Bill will provide necessary clarity for the industry, while stakeholders warn the tax could stifle innovation and investment. Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
