A new bill, the Virtual Asset Service Providers Bill 2025 has been introduced to bring oversight to crypto exchanges, stablecoin issuers, tokenisation platforms, and ICOs. If passed, it will create a dual-regulator model. The Central Bank of Kenya (CBK) will handle oversight for digital wallets, stablecoin issuers, and crypto payment processors. Meanwhile, the Capital Markets Authority (CMA) will regulate exchanges, tokenised investment platforms, brokers, and virtual asset managers.
For the first time, ICOs would fall under formal regulation. Projects looking to raise funds through token sales would need CMA approval and must provide disclosures similar to those required for IPOs. The goal is to reduce fraud and protect retail investors, many of whom have been burned by failed or deceptive offerings in recent years.
The bill also outlines requirements for platforms involved in tokenisation, the process of converting real-world assets like land or artwork into blockchain-based tokens. These platforms must register with the CMA and report how assets are priced, stored, and transferred.
Penalties for Non-Compliance in the Crypto Space
Opportunities and Challenges for Startups under the New Legislation
Stablecoin issuers will face new licensing requirements, reserve standards, and governance rules, including audits. These steps are meant to reduce risk in a market where stablecoins, especially dollar-pegged tokens are becoming popular for remittances and cross-border payments.
Non-compliance won’t come cheap. Penalties include fines ranging from KES 3 million to KES 20 million (roughly $23,000 to $155,000), potential jail time, and permanent bans from operating in the crypto space.
It’s a sharp departure from Kenya’s 2015 stance when the CBK warned citizens against using cryptocurrencies due to regulatory uncertainty. But today, crypto adoption is booming. A 2023 study by FSD Africa found that 47% of Kenyan consumers own some form of crypto, and stablecoin volumes across the continent hit $30 million over a 12-month period ending in July 2023.
The legislation also introduces AML (Anti-Money Laundering) and CFT (Counter-Terrorism Financing) compliance measures. Crypto platforms would be required to meet consumer protection standards and adhere to strict cybersecurity rules.
For startups like Kotani Pay, which uses stablecoins to deliver remittance services to underbanked communities, this could be a turning point. While compliance could raise costs, it also opens the door to legitimacy and potential partnerships with larger financial institutions.
Startups will need to engage regulators earlier in their product journey. At the same time, regulators face pressure to move faster, balancing safety with the agility that defines Africa’s fintech space.
