Kenya's National Treasury released the draft Virtual Asset Service Providers Regulations, 2026 on March 17, inviting public comment before the rules are finalized. The consultation period closes April 10, with nationwide public forums starting March 30. Once the regulations are confirmed, they will complete the implementation of the Virtual Asset Service Providers Act, 2025 (VASP Act), the law that gave Kenya its first statutory framework for licensing and supervising crypto businesses. No licenses have been issued yet; the consultation is a required step before any licensing pathway opens.

Kenya's move to regulate crypto represents a significant shift in official posture. For years, the Central Bank of Kenya actively warned consumers against crypto and declined to sanction crypto businesses. Institutional pressure accelerated the change: the IMF's 2025 Technical Assistance Report flagged Kenya as falling behind regional peers on crypto regulation, adding to the momentum that ultimately produced the VASP Act.

Cabinet Secretary John Mbadi framed the purpose plainly: the regulations are intended "to operationalise the Act whose objective is to provide for the legal framework for licencing and regulating the activities of Virtual Asset Service Providers in and from Kenya."

A Split Regulatory Structure

One of the more distinctive features of Kenya's approach is how it divides oversight between two regulators. The Central Bank of Kenya (CBK) will supervise payment-related crypto firms, stablecoin operators, and conversion platforms. The Capital Markets Authority (CMA) takes responsibility for exchanges, brokers, and tokenization platforms. The division tracks the underlying function of the business rather than the asset type alone, a structure that parallels the European Union's Markets in Crypto-Assets (MiCA) framework in broad structural terms, in that oversight is distributed across multiple regulators rather than centralised in one body.

The VASP Act covers a broad range of activities: crypto exchanges, wallet providers, payment facilitation, brokerage, custody services, and tokenization. Firms operating under it must meet Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) standards aligned with FATF (the global AML/CFT standards body), maintain internal audit functions, and comply with data protection requirements. Legal analysts at MMS Advocates noted that while the Act "balances innovation with investor protection and financial integrity," it also presents "significant compliance costs and operational complexity for smaller ventures."

Industry Organizes Ahead of Deadline

More than 50 crypto firms formed the Virtual Asset Association of Kenya (VAAK) in December 2025, specifically to coordinate engagement with the regulatory process. The group's formation signals that the industry is treating the April 10 deadline seriously. The consultation window is the last meaningful opportunity to shape the final rules before they are locked in. Capital requirements have not yet been specified in the draft; cybersecurity standards are referenced in the Act but their precise implementation thresholds remain open to industry input. VAAK's submissions could still influence provisions that will determine which operators can realistically comply.

Market Context: Kenya's Volume Relative to Peers

Sub-Saharan Africa received approximately $205 billion in on-chain crypto value between July 2024 and June 2025, a 52 percent increase year-over-year, according to Chainalysis. Nigeria led the region with $92.1 billion; Kenya ranked in the top five alongside South Africa and Ethiopia. Kenya also made its debut in the top 20 of the 2026 Global Crypto Adoption Index. Kenya has an estimated 733,000 or more crypto users, according to Statista and Serrari Group data, a figure that gives domestic scale to the on-chain volumes. Stablecoin adoption across Sub-Saharan Africa grew roughly 180 percent year-over-year, a figure relevant to Kenya given the CBK's jurisdiction over stablecoin and payment conversion platforms.

Kenya also restructured its tax treatment of digital assets under the Finance Act 2025. The government repealed its Digital Asset Tax, which had been levied on principal transaction values, and replaced it with a 10 percent excise duty on virtual asset transaction fees. The change shifts the tax incidence from users to platform margins, a distinction operators will need to factor into their compliance and pricing models.

Despite this activity, Kenya currently has zero licensed virtual asset service providers. Every exchange and wallet operating in the country sits in a legal gray zone until the licensing framework opens.

Regional Stakes

Kenya's framework carries weight beyond its borders. East Africa has lacked a formal regulatory anchor for crypto: Uganda has registration requirements but no comprehensive framework, and Tanzania and Ethiopia remain largely unregulated. Kenya's VASP Act positions Nairobi as the reference point for the region, a role Nigeria has played in West Africa since its Securities and Exchange Commission moved to mandatory licensing for digital asset businesses under the Investment and Securities Act 2025 and its SEC Digital Assets Rules. Ghana has also been active: its Parliament passed its own VASP Bill in December 2025, signalling that legislative momentum is building across the continent beyond Nigeria alone.

The CBK's jurisdiction over stablecoins is worth watching closely. Nigeria classifies stablecoins as securities under its SEC. Kenya is routing them through payments law instead, which creates a more direct pathway for remittance platforms that use USDT or USDC alongside M-Pesa corridors. How that distinction plays out in final licensing rules will matter to operators building cross-border payment infrastructure across East Africa.

Regional legal firm ALN Africa flagged a broader concern: fragmented national frameworks pose challenges for cross-border innovation, investment, and compliance for firms operating across multiple jurisdictions. Whether Kenya's final regulations align closely with standards already adopted in Nigeria and South Africa, or diverge, will shape how easy or difficult it becomes to build multi-country crypto businesses on the continent.

What Comes Next

The April 10 deadline marks the close of public input. After that, the Treasury will review submissions and finalize the regulations before licensing formally opens. Firms that want to influence requirements around capital thresholds, AML infrastructure, or technical standards have approximately three and a half weeks to submit. For operators currently running in the gray zone, the clock on formalization is running.