Kenya is taking significant steps to regulate the cryptocurrency industry with the introduction of the Virtual Asset Service Providers Bill, 2025. This proposed legislation mandates cryptocurrency firms, including major global players like Binance and Coinbase, to establish local offices in Kenya and appoint government-approved chief executives and directors. The bill is a part of the government’s broader efforts to create a structured and controlled environment for crypto trading.
Under the bill, all virtual asset service providers must maintain a registered office in Kenya. This requirement aligns with the government’s aim to exercise greater control over the crypto market, ensuring that companies operating within the country comply with local laws and regulations. Additionally, the law proposes that firms appoint CEOs or directors who will be subject to approval by regulatory bodies such as the Capital Markets Authority (CMA). The vetting process will involve an assessment of the candidates’ professional qualifications and their criminal history, particularly regarding any involvement in fraud or dishonesty.
The new law also stipulates that crypto companies must be managed by boards comprising at least two directors, all of whom must be natural persons. Importantly, the proposed regulations prohibit directors from serving on multiple boards simultaneously, which aims to enhance accountability and reduce conflicts of interest within the sector.
These regulatory measures come amid growing concerns about the decentralised nature of cryptocurrencies, which has made them susceptible to misuse for illegal activities such as theft, fraud, and money laundering. While crypto offers the advantage of facilitating cross-border transactions without the need for intermediaries like banks, its volatility and the lack of regulation have made it a risky market for investors.
Kenya’s push to regulate the crypto sector is also motivated by the need to capture tax revenue from an industry that is rapidly growing. The Kenya Revenue Authority (KRA) has already announced plans to introduce real-time crypto transaction monitoring, aiming to curb tax evasion and illicit financial activities. In addition, the Capital Markets (Amendment) Bill, 2023, seeks to include digital currencies under the definition of securities, which would subject them to capital gains tax and excise duties.
Despite the challenges posed by cryptocurrency’s volatility and its decentralised nature, Kenya recognizes its potential. With an estimated four million users, the local crypto market transacted Ksh.2.4 trillion between 2021 and 2022, a substantial portion of the country’s GDP. As the government continues to fine-tune its regulatory framework, Kenya is positioning itself to become a leader in crypto regulation within Africa, following in the footsteps of countries like South Africa and Rwanda.
