Kenya moved a step closer to comprehensive crypto oversight after the National Assembly considered the Virtual Asset Service Providers Bill at the Committee of the Whole House on October 2, 2025. The session put the bill through detailed clause-by-clause scrutiny, clearing the path to a third reading before potential presidential assent. If enacted, the framework would shift Kenya’s crypto activity from a gray zone to a licensed, supervised market with clear obligations for firms and protections for consumers.
Regulatory scope and supervisory architecture
The bill designates the Central Bank of Kenya and the Capital Markets Authority as primary regulators, with the National Treasury empowered to craft subsidiary rules. Those rules would span stablecoins, tokenization of real-world assets, prudential standards, cybersecurity, advertising, and anti-money-laundering, reflecting both market conduct and systemic-risk concerns. This division of labor and delegated authority has been flagged consistently in parliamentary committee papers and legal analyses since the bill’s tabling earlier this year.
Licensing and market conduct
Under the current text, only companies limited by shares, domestic or registered foreign, would be eligible for licenses to perform one or more defined virtual-asset activities. Operating without a license would be an offense, with penalties to be set in the Act, while regulators would be empowered to set capital, solvency, liquidity, disclosure, safekeeping, and periodic reporting requirements. Together, these features align the regime with FATF-style expectations and close long-standing gaps that left firms navigating crypto services through non-specific financial laws.
Key amendments debated at committee stage
Amendments tabled for the committee deliberations clarify definitions, expand AML coverage to AML/CFT/CPF, and carve out “virtual service tokens” from licensing where a provider handles only those tokens. Other changes tighten drafting across application, supervision, and enforcement clauses, while instructing the Cabinet Secretary to prescribe detailed prudential, cybersecurity, disclosure, and advertising standards by regulation. A notable proposed new Clause 45A would allow the Cabinet Secretary to appoint agents to trace transactions on digital marketplaces for tax assessment and recovery, with the agent retaining up to one percent of recovered proceeds.
Regional context and market impact
Kenya’s move mirrors a continental pivot toward formalizing digital-asset markets, following South Africa’s licensing drive and regulatory initiatives in Nigeria and Mauritius. Locally, lawmakers began second reading debates in mid-2025 and the finance committee’s July report underscored the dual-regulator model and risk-mitigation goals. For startups and established fintechs, clarity on licensing and tokenization rules, plus explicit standards for custody and cybersecurity, could unlock compliant product launches and partnerships in a market already ranked among Africa’s most active for retail crypto use.
Next steps and outlook
Procedurally, the bill now awaits the third reading in the National Assembly, after which it can be transmitted for presidential assent if passed. Separately, the National Treasury’s draft policy on virtual assets and the published gazette versions of the bill provide the scaffolding for fast deployment of subsidiary regulations once the law takes effect. With committee-stage momentum and a clear regulatory blueprint, Kenya is positioned to become one of East Africa’s most advanced jurisdictions for virtual assets, provided implementation balances innovation with rigorous safeguards.
The committee-stage progress on Kenya’s VASP Bill signals a decisive regulatory turn for a market that has operated without crypto-specific rules. By anchoring oversight in the CBK and CMA and empowering the Treasury to set granular standards, the bill creates a licensing pathway that is familiar to global providers yet responsive to local risks. The coming third reading will determine whether Kenya converts this momentum into law and, with it, a clearer, safer landscape for digital-asset innovation and investment.