Kenya's Treasury published the country's first comprehensive cryptocurrency regulatory legislation, the Virtual Asset Service Providers Bill (VASP Bill 2025), on May 8, 2025, which would mandate registration for crypto service providers and grant strict oversight powers to the Capital Markets Authority (CMA). The primary aims of the bill are to combat money laundering and terrorism financing, protect consumers, and ensure tax transparency in the rapidly growing cryptocurrency sector.
The Finance Committee of Kenya's Parliament is currently reviewing the proposal, which is expected to be passed by the end of 2025, and if approved, Kenya would join the small group of African countries that have established regulatory frameworks for cryptocurrencies, including South Africa and Mauritius.
Under the proposed legislation, all virtual asset service providers (VASPs), including cryptocurrency exchanges, wallet providers, and other crypto businesses, must register with the CMA, implement rigorous Know Your Customer (KYC) procedures, and share user transaction data with tax authorities. The bill contains specific provisions for regulating stablecoins, requiring issuers to prove they have necessary reserve assets and undergo regular audits. James Karanja, CEO of Aframp Technologies, highlighted that the regulation enables financial service providers to innovate safely with blockchain technology, while the Kenyan Treasury stated that the measures could increase tax revenue by up to 27 billion Kenyan shillings ($210 million) annually by tracking previously undocumented cryptocurrency transactions.
The bill holds significant importance as Kenya is a leading African country in cryptocurrency adoption: according to Chainalysis 2024 data, 8.5% of the population, approximately 4.6 million people, own cryptocurrency, and total crypto transaction volume reached $2.7 billion in 2023, representing a 32% increase from the previous year. As part of the VASP bill, the government is establishing a dedicated taskforce to support blockchain technology development and providing a regulatory sandbox for fintech companies to test new cryptocurrency-related products without full regulatory compliance. Patrick Njoroge, the Governor of Kenya's Central Bank, emphasised that the new regulatory framework aims to foster innovation without compromising consumer safety, and a 12-month transitional period will be provided for market participants to ensure compliance after the law takes effect.
Sources:
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Kenya’s Treasury has introduced the Virtual Assets Service Providers Bill
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Sam Adeyemo
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Kenya’s Treasury has introduced a new bill requiring crypto owners and service providers to disclose their identities and transactions.
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The Virtual Asset Service Providers Bill 2025 would license stablecoin issuers.
