Kenya plans to acquire a blockchain analytics system to monitor cryptocurrency transactions and help sniff out suspicious activity, its first major regulatory step following enactment of a new virtual assets law. The Capital Markets Authority (CMA) has floated a tender for a Virtual Assets Blockchain Analytics System to tighten its monitoring of the growing digital assets sector, whose pseudonymous and decentralized nature has long made it susceptible to illicit activity. Blockchain, the technology behind cryptocurrencies such as Bitcoin, is a decentralized ledger of all transactions across a network and enables participants to confirm deals without a need for a central authority. Blockchain analytics software extracts ledger data from the public blockchain, interprets transaction patterns to understand how funds move, and turns it into useful intelligence. Law enforcement agencies can use this information to evaluate financial risks, detect illicit activities such as terror financing, investigate crypto crimes, monitor for sanctions, money laundering or tax evasion, and track stolen crypto. CMA’s procurement comes as the government moves to tighten oversight of digital assets trade following the enactment of the Virtual Asset Service Providers Act, 2025, which established a legal framework for licensing and regulating crypto businesses. “CMA seeks to procure and implement an advanced Virtual Assets Blockchain Analytics System that will provide intelligence-led oversight of blockchain-based activities and support risk-based supervision of licensed and prospective virtual asset service providers,” the regulator says in its tender documents.
The system will enable real-time and historical transaction monitoring, risk detection and intelligence generation while supporting anti-money laundering and counter-terrorism financing compliance. “Enable forensic investigations, wallet attribution, fund tracing, linkage analysis, case management and evidence generation. Provide regulatory dashboards, management reports and analytics to inform supervision, enforcement and policy decisions,” the CMA says. Under the Virtual Asset Service Providers Act, 2025, the CMA and the Central Bank of Kenya (CBK) are the joint regulators of the sector. Firms dealing in virtual assets are required to obtain licences, conduct Know Your Customer (KYC) checks, report suspicious transactions and cooperate with agencies such as the Financial Reporting Centre (FRC) and the Directorate of Criminal Investigations (DCI). CMA says Kenya’s rapid adoption of virtual assets and blockchain-based financial services –such as Bitcoin, stablecoins and non-fungible tokens (NFTs)– has introduced risks like money laundering, terrorism financing, fraud, and market manipulation. Stablecoins are digital currencies whose value is pegged to assets such as the US dollar.
The regulator also cited sanctions evasion, tax evasion, cyber-enabled scams and cross-border illicit financial flows among threats that could undermine Kenya’s capital markets integrity and investor confidence. During crypto transactions, details such as price, asset, and ownership are recorded and verified on the blockchain database. This does not include identifying information of senders and receivers, but blockchain analytics companies can still trace the addresses of the crypto wallets involved in transactions. A crypto wallet address is a unique mix of numbers and letters that can be used to send and receive crypto. Examples of these blockchain intelligence firms include US-based Chainalysis and TRM Labs, and London-based Elliptic. In the US, for instance, the Federal Bureau of Investigation used blockchain analytics technology to recover millions of dollars in Bitcoin paid out in the 2021 Colonial Pipeline ransomware attack. Kenya’s cryptocurrency market has expanded rapidly in recent years, driven largely by the use of stablecoins for remittances, merchant payments and cross-border transactions. Chainalysis has previously placed Kenya as Africa’s fourth-largest recipient of stablecoins in the year to June 2024.
