Kenya has introduced the Virtual Assets Service Providers Bill 2025 as part of efforts to regulate its fast-growing cryptocurrency sector
The proposed legislation, which was received on April 4, now before Parliament, seeks to bring oversight to digital assets by requiring licensing for crypto exchanges, wallet providers, and stablecoin issuers.
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Focus on identity disclosure and financial integrity
Under the bill, the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) will share regulatory responsibilities. The CBK will oversee stablecoin issuers and payment processors, while the CMA will license exchanges, investment advisors, and tokenisation platforms.
A notable provision is the requirement for service providers to reveal the identities of individuals conducting crypto transactions. The legislation aims to end the anonymity often associated with digital assets and curb financial crimes such as money laundering and terrorism financing.
“A virtual asset service provider shall conduct its business with integrity at all times and shall not undertake mixer or tumbler services,” states Section 22 of the bill. The move aligns with global anti-money laundering (AML) standards after Kenya was placed on the Financial Action Task Force’s (FATF) grey list in 2024 over weak AML controls.
The bill also introduces strict rules for initial coin offerings (ICOs), requiring CMA approval and disclosures similar to traditional IPOs. Tokenisation platforms must register and provide details on asset valuation and storage.
While the regulations aim to curb fraud and illicit flows, they also acknowledge Kenya’s high crypto adoption. A 2023 FSD Africa report found that 47 percent of Kenyans own digital assets, with stablecoins gaining traction for cross-border payments.
“The government will develop a comprehensive law drawing from international standards,” the draft policy noted. Noncompliance penalties include fines of up to KES 20 million ($155,000) and potential jail terms.
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Benefits to Kenya and Africa
If passed, the bill could position Kenya as a regional leader in crypto regulation, offering clarity for fintech firms while addressing financial risks.
Furthermore, the bill will attract notable benefits, including enhanced investor confidence, reduced fraud, and stronger anti-money laundering controls. Regulating stablecoins and exchanges could boost remittance efficiency and financial inclusion.
For Africa at large, the country regulatory framework will set a precedent for balanced crypto regulation, encouraging regional harmonisation. However, its success will depend on enforcement and adaptability to the evolving digital finance system.