Africa-Press – Kenya. THE government has invited members of the public and industry players to submit views on proposed regulations aimed at bringing virtual assets such as cryptocurrencies under formal oversight.
In a draft of the Virtual Asset Service Providers Regulations, 2026, the National Treasury is seeking to establish a comprehensive legal and supervisory framework for firms dealing in digital assets, following the enactment of the Virtual Asset Service Providers Act, 2025.
This is a step towards formalising the country’s crypto and digital asset industry.
Developed by a Multi-Agency Task Force in collaboration with the Central Bank of Kenya and the Capital Markets Authority, the regulations aim to bring order, security and transparency to a sector that has long operated in a legal grey area.
The new regulations are designed to operationalise the Virtual Asset Service Providers Act, 2025 with the core objective being to create a robust legal framework for licensing, ensuring only vetted entities operate within the Kenyan market.
It also seeks to protect consumers and safeguard Kenyans against fraud and high-risk speculative activities and improve financial integrity, by implementing standards to prevent money laundering and the financing of terrorism.
The proposed rules will apply to individuals and firms offering virtual asset services “in or from Kenya,” including those operating digitally but deriving income from the country.
If adopted, the regulations will require all virtual asset service providers to obtain licences before commencing operations, with strict conditions on governance, capital adequacy, consumer protection and cybersecurity.
Under the draft, applicants will be required to disclose detailed information about their ownership, management, source of funds and business models.
They must also demonstrate sufficient capital, robust risk management systems and compliance with anti-money laundering laws.
Regulators will have powers to reject applications where firms fail to meet “fit and proper” criteria or pose risks to financial stability.
Licensed firms will also be subject to ongoing supervision, including mandatory reporting, audits and inspections, as well as requirements to maintain transaction records for at least seven years.
The draft regulations place strong emphasis on consumer protection, requiring firms to disclose risks associated with virtual assets, including price volatility and cybersecurity threats, before onboarding clients.
“Service providers will also be required to implement complaint-handling mechanisms, safeguard customer funds and ensure transparent pricing of fees and commissions,” the draft states.
In addition, the rules prohibit misleading advertising and outline strict guidelines for promotions, including mandatory risk warnings.
The framework introduces specific provisions for emerging digital finance products such as initial coin offerings (ICOs), stablecoins and tokenised real-world assets.
Firms seeking to launch ICOs will be required to publish detailed “white papers” outlining project risks, governance structures and use of funds, while stablecoin issuers must maintain adequate reserve assets and ensure redeemability.
The regulations also provide for approval and oversight of virtual asset trading platforms, including requirements for transparency, fair trading and prevention of market abuse.
The move signals Kenya’s intention to formalise the fast-growing digital asset sector, which has largely operated without clear rules.
Officials say the framework is designed to strike a balance between fostering innovation and protecting investors, while also addressing risks related to fraud, money laundering and financial instability.
Stakeholders have been urged to submit comments before the regulations are finalised, in what the Treasury describes as “a critical step toward building a safe and competitive digital finance ecosystem.”
Once implemented, the rules are expected to reshape Kenya’s virtual asset market, setting the stage for increased investor confidence and broader participation in the digital economy.
