Kenya has formally enacted its Virtual Asset Service Providers Regulations, 2026, imposing a ban on stablecoin interest payments and setting a strict licensing deadline, while a parallel trend in the UK and US sees banks blocking or delaying fiat transfers to cryptocurrency exchanges at record rates. The developments mark a hardening regulatory posture on both sides of the crypto-fiat interface, squeezing yield models and payment corridors simultaneously.
Published in Kenya Gazette Supplement No. 185 under Legal Notice No. 134, the 116-page rulebook completes the Virtual Asset Service Providers Act signed by President William Ruto in October 2025. Central Bank of Kenya (CBK) now oversees virtual-asset-to-fiat conversions and stablecoin issuers, while the Capital Markets Authority (CMA) regulates exchanges, token issuance platforms, and ICOs. Crucially, the regulations reach any firm targeting Kenyan consumers, even if based offshore. Stablecoin issuers must hold KSh300 million (approx. $2.3 million) in paid-up capital and are expressly forbidden from paying interest, effectively stripping yield from dollar-pegged instruments used widely in remittances and merchant payments. Existing operators have until 4 November 2026 to obtain a licence, yet no firm has yet been licensed, creating a compliance cliff.
Meanwhile, UK banks block or delay roughly 40% of domestic payments to crypto exchanges, according to the UK Cryptoasset Business Council’s January 2026 report. Chase UK, Starling Bank, TSB, Virgin Money, and Metro Bank enforce total bans on crypto transfers. NatWest caps payments at £1,000 daily, HSBC at £2,500 per transaction. A major UK exchange reported nearly £1 billion in declined transactions over a single year. The surge in restrictions follows the Payment Systems Regulator’s mandatory reimbursement rules introduced in October 2024, which make banks liable for up to £85,000 per authorised push payment fraud incident. In the US, the DOJ subpoenaed JPMorgan Chase, Bank of America, and Wells Fargo in June 2026 over alleged politicised account closures, a probe dubbed Operation Chokepoint 2.0. A UK cross-party parliamentary inquiry launched on 21 July 2026 will examine whether bank restrictions are proportionate.
The combined effect is a narrowing of fiat gateways and yield avenues, creating headwinds for crypto on-ramp services and stablecoin-based interest products. The regulatory fragmentation and compliance costs could push smaller operators out of these markets.
