Kenya’s Task To Shape Stablecoins Responsibily

From mobile money to real‑time payments, Kenya’s digital payments solutions have emerged because consumers and businesses needed faster, inexpensive and more reliable ways to move value. The growing use of stablecoins across Kenya and East Africa follows a similar trajectory.

The enactment of Kenya’s Virtual Asset Service Providers Act in 2025 has brought long‑awaited regulatory clarity to an area that has been active for years, often operating under uncertainty. This moment presents a clear choice. Stablecoins can either evolve as a trusted extension of the financial system or continue growing at the margins, beyond effective oversight.

Recent dialogue between regulators, policymakers and industry highlights a shared reality. Stablecoins are already being used in Kenya and the wider region, particularly for remittances, cross‑border trade and business‑to‑business payments. Demand has persisted regardless of regulation. The core policy challenge, therefore, is not whether stablecoins should exist, but how they should be governed to deliver economic value while managing risk.

Experience from Kenya and neighbouring markets suggests that overly restrictive approaches can be counterproductive. Prohibitive rules do not eliminate demand. Instead, they push activity offshore or underground, where regulatory visibility is limited and consumer risks increase. Proportionate and enabling frameworks, by contrast, allow innovation to take place within clear guardrails, giving regulators the ability to supervise activity rather than react to it.

The strongest economic case for stablecoins lies in addressing long‑standing payment frictions. Cross‑border trade within East Africa remains costly and fragmented, even as domestic mobile money usage reaches near‑universal levels. Small and medium‑sized enterprises face high fees, delays and foreign exchange risk when transacting across borders. Implemented responsibly, stablecoins could act as a neutral bridge between disconnected systems, complementing existing payment rails rather than competing with them.

Yet technology alone will not deliver impact. Infrastructure gaps remain a major constraint. Inefficient on‑ and off‑ramps can leave value stranded in digital form, disconnected from real economic activity. Access to banking services for licensed providers is uneven, while standardised custody and compliance frameworks are still evolving. Without progress in these areas, stablecoin use risks remaining confined to closed loops with limited broader benefit.

This is where the role of global payment infrastructure providers becomes relevant. In recent years, Visa has focused on applying stablecoins to the less visible but critical layers of the payments system, particularly institutional settlement and interoperability.

Globally, Visa has piloted and rolled out the use of regulated stablecoins such as USDC for settlement between issuing and acquiring banks, enabling faster and more flexible fund movement over blockchain networks without altering the consumer payment experience.

This work reflects a broader effort to bridge traditional payment rails with blockchain infrastructure, with a strong emphasis on risk management, regulatory compliance and open connectivity across multiple networks. The underlying premise is that stablecoins derive their long‑term value not from isolated platforms, but from interoperability, shared standards and regulatory trust.

Kenya’s mobile money ecosystem offers a strong foundation to build on. Mobile wallets are already regulated, fully backed stores of value that enjoy high public trust. However, regulatory and technical silos limit interoperability across platforms and borders. One concept gaining attention is the tokenisation of mobile money float, which could enable faster cross‑platform and cross‑border transfers while reducing settlement friction. Realising this potential will depend on close collaboration between regulators and industry and on harmonised policy approaches.

Regional coordination is equally important. Payments do not stop at national borders, and neither should regulatory thinking. Alignment with the East African Community Cross‑Border Payment System Masterplan offers a practical pathway to reduce fragmentation while preserving competition and market openness. Tools such as licence passporting and regulatory reciprocity, supported by consistent AML and KYC standards, can help build a more integrated regional payments landscape.

Kenya’s stablecoin moment echoes earlier chapters in its financial innovation journey. Mobile money succeeded not because regulation stood still, but because it evolved alongside the market. Policymakers allowed experimentation, learned from outcomes and adjusted frameworks over time.

Stablecoins now present a similar test. With legislative foundations in place, the focus must shift from regulation to implementation. A balanced, collaborative and regionally coordinated approach offers the most credible path to harness stablecoins for economic growth, trade facilitation and financial inclusion in East Africa.