Kenya Proposes First Crypto Bill To Regulate Stablecoins

Kenya has introduced its first regulatory framework aimed at overseeing cryptocurrencies and other digital asset services. This marks a significant policy shift in one of Africa’s most vibrant crypto markets.

The proposed Virtual Asset Service Providers Bill 2025 outlines licensing requirements for stablecoins, initial coin offerings (ICOs), digital wallets, crypto exchanges, and investment advisors operating in the virtual asset space.

If enacted, the bill would establish a dual regulatory system, splitting responsibilities between the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA). The CBK would oversee wallet providers, stablecoin issuers, and crypto payment processors, while the CMA would be responsible for licensing exchanges, tokenisation platforms, investment advisors, brokers, and virtual asset managers.

The bill brings ICOs into the regulatory fold, requiring any firm looking to issue or sell digital tokens for fundraising to obtain approval from the CMA, provide project disclosures, and comply with rules similar to those that govern Initial Public Offerings (IPOs) in the stock market. The objective is to protect investors, particularly in the wake of numerous failed and fraudulent coin offerings.

It also sets out regulations for tokenisation—the process of converting real-world assets such as land or artwork into blockchain-based digital tokens. Platforms involved in tokenisation must register with the CMA and provide information on how assets are valued, stored, and transferred. While this could enable fractional ownership and broaden investment access, it also raises concerns about verification and potential fraud.

Stablecoin issuers would be subject to new licensing conditions and reserve requirements, including mandatory audits and governance measures, aimed at reducing systemic risk as dollar-pegged tokens grow in popularity for remittances and cross-border payments.

Penalties for non-compliance include fines ranging from $23,000 (KES 3 million) to $155,000 (KES 20 million), possible imprisonment, and permanent bans from the industry.

This proposal marks a significant departure from the CBK’s stance in 2015, when it cautioned the public against using cryptocurrencies due to regulatory uncertainty. Today, Kenya ranks among Africa’s top adopters of crypto, fueled by widespread mobile usage and increasing interest in digital assets. A 2023 study by Financial Sector Deeping (FSD) Africa revealed that nearly 47 percent of Kenyan consumers own cryptocurrency, with stablecoin transaction volumes across the continent surpassing $30 million in the 12 months leading up to July 2023.