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Kenya has approved a Virtual Asset Service Providers (VASP) law, establishing a clear framework to regulate digital asset businesses across the country. The Act does not control Bitcoin itself or individual self-custody but targets companies managing customer assets such as exchanges, custodians, and brokers. It introduces a structured licensing perimeter around these intermediaries, giving authorities enforcement powers over commercial participants. The law excludes individual users who self-custody or transact peer-to-peer, ensuring private ownership remains unaffected.
The VASP Act defines boundaries for digital asset activity, regulating only businesses that handle customer funds or assets. These include brokers, exchanges, and token issuers. Individuals transacting directly remain outside the scope.
Any entity offering custody, trading, or investment advisory services must now obtain a license. The framework maps activities to regulators such as the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA).
Lawmakers describe it as building a “regulatory fence” around companies, allowing oversight without interfering with private crypto ownership. Firms within this fence will undergo fit-and-proper tests, maintain capital reserves, and meet audit and cybersecurity standards.
Kuria Kimani, chair of the Parliamentary Finance Committee, told Reuters, “We are hoping that Kenya can now be the gateway into Africa.” He noted that many young Kenyans between 18 and 35 actively use virtual assets for trading, payments, or investments.
Licensed Virtual Asset Service Providers (VASPs) include all Kenya-registered or compliant foreign companies conducting digital asset business listed in the Act’s schedule.
These categories cover exchanges and trading platforms that manage fiat-to-crypto or crypto-to-crypto trades. Both centralized and certain decentralized platforms that hold custody or market-make against clients are included.
Custodians and wallet providers controlling customer keys must comply with capital adequacy, segregation, and auditing rules. Investment advisors and managers handling client portfolios also fall under regulation.
Token issuers offering digital assets or conducting real-world asset tokenization must follow oversight from the CMA. Meanwhile, escrow and platform operators facilitating multi-party trades are also subject to the Act’s provisions.
Each licensee must implement strong AML/CFT controls, maintain solvency, ensure proper conduct, and meet cybersecurity standards. Advertising and reporting obligations will ensure transparency similar to banking regulations.
The law positions Kenya alongside South Africa, which adopted a crypto licensing regime in 2023. Analysts say this step could attract global investment while strengthening regulatory credibility in East Africa’s largest economy.
Kenya’s crypto adoption continues to expand. Chainalysis data shows the country ranked fourth in Africa for crypto transaction volume between July 2024 and June 2025, with nearly $20 billion in digital asset inflows.
Kenya’s long-standing digital finance infrastructure, led by M-PESA, supports the transition toward regulated crypto usage. Nearly 96% of households rely on mobile money for daily transactions.
Yet, the new licensing costs may challenge smaller exchanges and informal traders. Many small operators may struggle with compliance, prompting questions about whether regulation could reshape Kenya’s fast-growing digital economy.
Will tighter oversight strengthen innovation or limit grassroots crypto activity in one of Africa’s most digital-savvy nations?
Kenya’s new Virtual Asset Service Providers (VASP) law establishes a clear regulatory framework for digital asset companies while excluding peer-to-peer users and private ownership. The Act brings exchanges, custodians, and token issuers under the supervision of the Central Bank of Kenya and the Capital Markets Authority.
Related: Kenya Launches Real-Time Crypto Tax System to Boost Revenue
