Kenya's National Treasury has published a comprehensive draft of operational rules for the country's virtual asset sector, marking a significant step toward formalizing the oversight of cryptocurrencies. The draft, issued under the Virtual Asset Service Providers Act which took effect in November 2025, is open for public comment until April 10, 2026.
The regulations were developed by a multi-agency task force in consultation with the Central Bank of Kenya and the Capital Markets Authority. This push for a regulatory framework follows Kenya's grey listing by the Financial Action Task Force (FATF) in February 2024, which cited deficiencies in the country's anti-money laundering and counter-terrorism financing controls.
A cornerstone of the proposal is a strict reserve requirement for stablecoin issuers. Issuers would be mandated to hold at least 30% of customer funds in segregated accounts at commercial banks domiciled within Kenya. The remaining reserves must be invested in secure, low-risk assets classified as high-quality liquid assets (HQLA) and held within the country. Eligible assets are narrowly defined to include cash, central bank reserve deposits, bank deposits, government securities with a residual maturity of 90 days or less, and repurchase agreements with a maturity of no more than seven days.
The draft also introduces transaction-based fees for digital asset platforms. Token issuance platforms would be subject to a 0.05% fee per transaction, payable by each counterparty. For initial virtual asset offerings, a proposed levy of 0.5% of the value of a successful offer would apply.
Licensing provisions have been expanded, now allowing limited liability partnerships to apply, whereas the original bill limited eligibility to companies. The regulatory authority would have 90 days to respond to license applications, with licenses valid for 12 months from the date of issuance instead of expiring on a fixed calendar date.
Furthermore, the definition of a "virtual asset" is broadened to include a "digital representation of value that is intended to represent a real-world asset on blockchain or any other technology." The definition of an "issuer" is also expanded to cover any natural or legal person that creates or distributes crypto-assets to the public.
All virtual asset service providers will be required to open and operate a bank account in Kenya and undergo a system audit every two years, conducted by a certified IT auditor. These audits will assess digital infrastructure, data security, transaction integrity, cybersecurity preparedness, and operational resilience.
The National Treasury has scheduled public participation forums across 11 venues, including Nairobi, Mombasa, and Kisumu, to gather feedback before finalizing the rules.
