The Insurance Regulatory Authority (IRA) of Kenya has advanced a landmark regulatory initiative: the publication of draft regulations under the proposed Insurance (Amendment) Regulations 2025 that introduces virtual assets insurance as a newly recognized class of insurance business.
Under the draft insurers would for the first time be permitted to offer cover for digital or virtual assets such as cryptocurrencies, stablecoins and other digital asset holdings, thus creating a sub-category of insurance to protect against risks such as hacking, employee theft, digital wallet breaches and fraud. The regulator has allocated business class number 142 for virtual assets among the industry’s recognized subclasses.
This move reflects Kenya’s growing engagement with digital assets, according to data from blockchain firms, Kenya transacted over KES 426.0 billion in stablecoins during the year to June 2024. Recognizing this reality, the IRA’s draft seeks to modernize the regulatory framework and align insurance products with emerging demands, while also reinforcing consumer protection and financial sector resilience.
From an investor and industry perspective, several key implications arise. First, by formally enabling insurers to underwrite crypto-asset exposure, the draft taps into an under-insured global market. Despite the digital assets market running into trillions worldwide, only a small fraction of holdings is presently insured. Second, the regulation signals Kenya’s intention to be proactive in the intersection of fintech and digital asset risk management, potentially positioning local insurers and reinsurers to develop specialized products, partnerships and underwriting capabilities in a niche yet high growth area. Third, the introduction of virtual asset insurance carries distinct risk management and governance challenges, insurers will need robust controls around cyber risk, custody arrangements, technological vulnerability, valuation of digital assets, regulatory compliance (including anti-money laundering controls) and the evolving legal status of virtual assets in Kenya and globally.
For regulators and policy makers, the draft appears to reinforce the broader policy agenda for digital assets governance. Kenya recently published a draft national policy on virtual assets and virtual asset providers, as well as progressing legislation to regulate Virtual Asset Service Providers (VASPs). The IRA’s initiative thus compliments those structural reforms addressing the insurance side of the digital asset ecosystem.
In practical terms, insurers wishing to enter this space will likely need to expand technical capabilities, underwrite new forms of risk, design suitable policy terms, price appropriately given the still evolving loss experience and work with regulators on supervision and standards. Meanwhile, policy holders and digital asset holders should anticipate the availability of new cover options and should also be alert to exclusions, premium levels, claims handling and the terms around what constitutes “insured loss” in a digital asset context.
In summary, the IRA’s draft regulations represent a notable step in Kenya’s financial services evolution by creating a regulatory pathway for virtual asset insurance. For insurers, this opens a new frontier of business, for policy holders in the digital asset economy, it offers emerging protection and for the broader ecosystem, it signals Kenya’s willingness to integrate digital asset risks into its regulated marketplace.
