Kenya is moving to tighten oversight of the cryptocurrency sector with new rules that will require firms dealing in digital assets to hold up to Sh500 million in paid-up capital.
The proposed regulations, published by the National Treasury, mark a major shift in how the country plans to supervise virtual asset service providers as adoption of cryptocurrencies continues to grow.
New Capital Thresholds Across Crypto Services
Under the draft Virtual Asset Service Providers Regulations 2026, different categories of crypto businesses will face varying capital requirements based on their risk exposure.
Stablecoin issuers, firms that create digital currencies pegged to traditional assets like the US dollar, will face the highest threshold. They will need to maintain Sh500 million in paid-up capital and at least Sh100 million in liquid capital or match 100 percent of their liabilities.
Other operators will also face significant requirements:
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Tokenisation platforms and initial coin issuers: Sh200 million
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Crypto exchanges and wallet providers: Sh150 million
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Payment processors: Sh50 million
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Brokers and asset managers: Sh30 million
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Investment advisers: Sh2.5 million
In addition, firms offering multiple services must meet the capital requirement for each licensed activity, increasing the financial burden for diversified operators.
Focus on Investor Protection
The rules aim to protect investors by ensuring firms have enough financial backing to absorb shocks and meet obligations.
Companies will also be required to hold reserves in low-risk assets and maintain liquidity levels tied to their liabilities. Regulators may further increase capital thresholds depending on a firm’s risk profile.
Licensing fees will range between Sh100,000 and Sh2 million, renewable annually or pegged at 0.15 percent of gross turnover, whichever is higher.
Joint Oversight by CBK and CMA
The new framework will be implemented under the Virtual Assets Service Providers Act 2025, which came into force in November last year.
The law gives the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) joint responsibility to license and regulate crypto firms.
This coordinated approach reflects growing concern among regulators about the risks posed by unregulated digital asset markets, including fraud, volatility, and consumer protection gaps.
Public Participation Ongoing
The draft regulations are currently undergoing public participation, allowing industry players and the public to submit feedback before final implementation.
The framework builds on a national policy on virtual assets developed in 2024 by a multi-agency taskforce that included the CBK and CMA.
Kenya’s Growing Crypto Market
The regulatory push comes as Kenya cements its position as a major player in global cryptocurrency adoption.
According to the 2025 World Crypto Ranking report by Bybit, Kenya ranks fifth globally in transactional crypto usage. The country trails only Ukraine, the United States, Nigeria, and Vietnam.
Much of this activity is driven by stablecoins, which are widely used for cross-border payments and everyday transactions due to their price stability.
Analysts say Kenya’s strong mobile money ecosystem and high digital penetration have made it easier for users to adopt crypto solutions, especially in retail and peer-to-peer transactions.
Balancing Innovation and Regulation
The proposed rules highlight the government’s attempt to strike a balance between encouraging innovation and protecting investors.
While the high capital requirements may strengthen trust in the sector, they could also raise barriers to entry for smaller startups and local innovators.
As the consultation process continues, industry players are expected to weigh in on whether the thresholds strike the right balance—or risk slowing down growth in one of Kenya’s fastest-evolving financial sectors.
