Kenya’s financial regulators have issued a clear reminder that no virtual asset firms are yet licensed under the new Virtual Asset Service Providers (VASP) law.
The Central Bank of Kenya (CBK) clarified that the licensing process for VASPs can only begin once the detailed implementing regulations under the Virtual Assets Service Providers Act, 2025, are officially released.
In a statement issued on Tuesday, CBK emphasised that neither it nor the Capital Markets Authority (CMA) has granted any licenses so far.
That’s because the Act, although gazetted on October 21, 2025, and effective from November 4, depends on further regulations to operationalise its provisions.
The new law marks a significant milestone for Kenya, as the country’s digital asset and cryptocurrency market now falls under clear statutory regulation for the first time. CBK and CMA, working together, will jointly regulate a wide range of services, including virtual asset exchanges, token platforms, wallet providers, and custodians.
According to the statement, the National Treasury is currently finalising the implementing regulations that will spell out specific licensing requirements, how supervision will work, and the mechanisms for risk control, compliance, and reporting. These regulations will also define governance, anti–money laundering, and consumer protection obligations that VASPs must meet before they can be licensed.
The law requires firms to maintain a physical office in Kenya, adopt robust conflict-of-interest policies, and open a Kenyan bank account for oversight purposes.
VASP Rules
On the anti-money laundering front, licensed entities will need to implement transaction monitoring, conduct due diligence, and report suspicious activities. There are also data protection obligations, with licensees expected to handle customer information responsibly.
VASPs will also be required to segregate client assets, keeping customer funds or tokens separate from their own, and to maintain adequate capital, solvency, and insurance coverage. Regulators will have the authority to inspect operations both on-site and off-site to ensure accountability.
The penalties for non-compliance are substantial. Individuals found operating without a license or violating key provisions may face fines of up to Ksh 10 million or imprisonment of up to ten years, or both. Companies can face fines of up to Ksh 20 million.
This regulatory overhaul aligns Kenya with global standards, particularly on anti-money laundering and consumer protection, and aims to bring legitimacy and stability to an industry that has historically operated in a regulatory gray zone.
The law also revises how virtual assets are taxed. The previous three per cent Digital Asset Tax on transaction value has been removed and replaced with a 10 per cent excise duty on fees and commissions charged by licensed virtual asset platforms.
Traditional income tax or capital gains tax will continue to apply to users depending on how they hold or use virtual assets.
There is a broader policy vision behind this law. Kenya’s National Treasury had earlier drafted a National Policy on Virtual Assets and VASPs, emphasising both the risks and opportunities in this space.
The policy framework was developed collaboratively with input from CBK, CMA, and other agencies to balance innovation with financial stability.
In short, while the VASP Act is now law, no virtual asset firms are yet licensed. Regulators are still working on the detailed rulebook, and until it is released, no entity is officially approved to operate.
Once the regulations are in place, the law could reshape how digital assets are traded and regulated in Kenya, providing stronger consumer protection and more certainty for businesses.
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