Kenya is taking a bold step toward regulating its booming digital asset sector with the introduction of the Virtual Asset Service Providers (VASP) Bill, 2025. The proposed legislation, tabled by the National Treasury, aims to bring order and accountability to the country’s rapidly growing cryptocurrency market.
The VASP Bill is designed to provide a structured legal framework for virtual asset activities, targeting entities such as crypto exchanges, custodial wallet providers, token issuers, and other intermediaries in the ecosystem. With Kenya’s digital asset market estimated to be worth over KSh 2.4 trillion annually—nearly 20% of the national GDP—the need for clear regulation has become urgent.
One of the bill’s standout features is the ban on anonymizing tools like “mixers” and “tumblers,” which are often used to obscure the origin and destination of crypto transactions. These services have come under global scrutiny for enabling money laundering and illicit financial flows. Offenders could face steep penalties: up to KSh 3 million ($23,000) for individuals and KSh 10 million ($77,000) for corporate entities, in addition to potential jail terms.
To operate legally, virtual asset service providers will need to obtain licenses from either the Capital Markets Authority (CMA) or the Central Bank of Kenya (CBK), depending on the nature of their services. The CBK will oversee wallet providers and payment processors, while the CMA will regulate exchanges, token projects, brokers, and crypto investment advisers.
In a move to increase accountability, all licensed VASPs will be required to maintain a physical office in Kenya and have a board with at least three natural-person directors. Additionally, providers must give regulators real-time, read-only access to transaction data—an effort to cut down on anonymity and improve compliance.
Tax enforcement is also on the horizon, with discussions underway between the government and the Kenya Revenue Authority (KRA) about integrating crypto platforms into the national tax system. This would help track and tax crypto-based income more effectively.
At a recent press briefing in Nairobi, Rachel Conlan, Global Chief Marketing Officer at Binance, expressed support for Kenya’s regulatory efforts. She noted that greater regulatory clarity—such as what’s emerging in Europe, the U.S., and now Kenya—will be crucial in expanding the crypto industry. “This will not only drive innovation and investment, but also enhance consumer protection and financial system integrity,” Conlan emphasized.
As Kenya moves toward formalizing its crypto economy, the VASP Bill represents a pivotal moment in balancing innovation with regulation—offering the potential to transform Kenya into a regional leader in digital finance.
