Kenya has officially commenced a new regulatory regime for digital assets, bringing Virtual Asset Service Providers (VASPs) under formal oversight for the first time.
The Virtual Assets Service Providers Act, 2025, which became effective on 4 November, introduces a sweeping legislative framework governing the licensing and supervision of firms operating in the cryptocurrency and digital asset ecosystem.
Gazetted on 21 October, the Act positions Kenya among the first African countries to establish a dedicated legal structure aimed at combating financial risks associated with virtual assets, including money laundering, terrorism financing, and proliferation financing.
The new law aligns Kenya with global standards set by bodies such as the Financial Action Task Force (FATF), as governments worldwide move to tighten oversight on digital finance.
Under the Act, the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) have been designated as the joint regulators responsible for licensing, supervising, and regulating VASPs.
Their mandate includes assessing applicants, enforcing compliance, and issuing operational guidelines to ensure accountability and transparency within Kenya’s burgeoning digital asset market.
In a joint public notice, CBK and CMA confirmed that no VASP has been licensed yet, meaning that no entity is currently authorised to operate in or from Kenya under the new law.
Licensing will begin once the Cabinet Secretary for the National Treasury completes the development and issuance of regulations that will offer further guidance on the implementation of the Act.
The regulators stressed that until the regulatory framework is finalised, all virtual asset service providers must refrain from offering services to the Kenyan public.
“The licensing of VASPs will commence upon issuance of these Regulations,” the notice states. “Currently, CBK and CMA have not licensed any VASPs under the Act to operate in or from Kenya.”
Kenya has long been a centre for fintech innovation in Africa, driven by mobile money platforms such as M-Pesa. Yet virtual assets, including cryptocurrencies, blockchain-based services, and other digital assets, have operated for years in a regulatory grey area.
The new law seeks to close that gap by bringing clarity to a space that regulators have often viewed with caution.
The government has previously warned the public about the risks associated with unregulated crypto trading, citing consumer protection concerns and the growing threat of illicit financial flows.
With the new regulatory framework, authorities say they are aiming to balance innovation with financial stability.
Firms offering services such as crypto exchanges, digital asset transfers, custody services, and related blockchain-based financial activities will now be required to meet formal licensing criteria, including capital requirements, governance structures, and anti-money-laundering controls.
Kenya’s move comes amid increasing global pressure on countries to regulate virtual asset markets. The FATF has repeatedly urged governments to adopt standards that prevent digital platforms from enabling financial crimes.
Several African nations, including South Africa and Nigeria, have also begun implementing more robust digital asset regulations.
For Kenya, the urgency has been amplified by rising concerns about fraud schemes, unregistered crypto platforms, and the use of digital assets in cross-border transactions that escape traditional oversight.
The new law places the responsibility for vetting and supervising VASPs squarely in the hands of CBK and CMA, institutions already familiar with overseeing conventional financial and capital markets.
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