Kenya's cryptocurrency industry is raising alarms over newly proposed licensing rules that require virtual asset service providers to hold significant paid-up capital before obtaining operating permits. The Virtual Asset Association of Kenya (VAAK), representing about 50 firms, warned that the capital thresholds could systematically exclude startups and concentrate the market among a handful of well-funded players.
Strict Capital Requirements Under the Draft Regulations
The Draft Virtual Asset Service Providers Regulations 2026, released by Kenya's National Treasury, outline licensing requirements for exchanges, wallet providers, and stablecoin issuers. Under the proposal, stablecoin firms would need up to 500 million Kenyan shillings ($3.86 million) in paid-up capital, while other service providers face lower but still substantial requirements. The rules also mandate that firms ring-fence client funds and submit to oversight by the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA).
VAAK warned that the capital demands, combined with insurance and compliance costs, risk excluding startups from the formal market. According to the association, this could drive users toward offshore or unregulated platforms, undermining the consumer protection goals regulators seek to achieve.
Legislative Timeline and Public Consultation
In October 2025, Kenyan lawmakers passed the VASP Act, which President William Ruto signed into law. The Act serves as a parent law, requiring the National Treasury to develop specific regulations before licensing can begin. On March 17, 2026, the Treasury unveiled the draft regulations, with a public feedback deadline of April 10, 2026.
Kenyan authorities argue that the regulations are necessary to safeguard investors and bring order to a sector that has grown rapidly but remains largely unregulated. Kenya is among Africa’s leaders in fintech adoption, and policymakers say tighter rules are needed to prevent fraud and financial instability.
After the public consultation period ends, the Treasury and the Multi-Agency Task Force will finalize the regulations. Only after formal publication in the Kenya Gazette will the CBK and CMA begin accepting license applications. Industry players are now lobbying for reduced capital thresholds before the final rules are gazetted.