Kenya’s capital markets regulator is weighing how to extend investor protection to the country’s rapidly expanding virtual asset market, acknowledging that crypto users remain exposed when licensed intermediaries fail. The Capital Markets Authority (CMA) has indicated it is exploring a compensation mechanism tailored specifically to virtual asset investors.
At present, Kenya’s investor protection framework applies only to traditional capital markets. Investors trading in equities through licensed brokers can seek limited compensation through the Investor Compensation Fund if a broker collapses or becomes insolvent. Virtual asset investors, however, fall outside this structure, even in cases involving platform failure, custodial breakdowns, or operational misconduct.
“The current fund (ICF) can pay investors when brokers or investment banks go under, but people felt that we now have many players who are like brokers. So those are the different discussions we are having.There are discussions to bring on board more players. For example, one of the discussions which we know would be separate is the issue of virtual assets,” said CMA Chief Executive Wycliffe Shamiah in an interview with The EastAfrican.
The CMA has made clear that this gap cannot be closed simply by extending existing mechanisms. Regulators view virtual asset markets as structurally different from equity markets, with distinct risk profiles, custody arrangements, and failure modes. As a result, any compensation framework for crypto investors is being considered separately rather than as an expansion of the current investor fund.
“You know, those are purely different markets, the equity market and the virtual asset market. We have the normal capital markets, but virtual assets are new creations, so the discussions we are having are about what layers of protection we can have in their cases and whether a fund can be set up for that purpose. That is a discussion we need to have at some point, but I don’t think we want to mix them because these are two different markets,” said Shamiah.
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“Even if they, equity and virtual asset markets, are under our regulations, we will most likely recommend that we have a separate fund which can cater for them. But you realise we are just starting that market, so as we grow, those are the issues we will be discussing. We don’t think we will have the virtual asset market provided for in the current Investor Compensation Fund (ICF) because that fund has specific sources and specific players, and of course the players are also very different,” he continued.
According to published reporting, the authority is still assessing how such a framework would be designed, including questions around eligibility, funding, and limits. The regulator has also drawn a line between losses arising from market volatility, which are inherent to speculative trading and losses linked to the failure of licensed intermediaries.
These discussions are taking place against the backdrop of the Virtual Asset Service Providers Act, which came into force in late 2025 and formally brought virtual asset service providers under regulatory oversight. The Act establishes licensing, governance, and compliance requirements for crypto exchanges, brokers, custodians, and wallet providers, creating the legal foundation needed for consumer protection measures to be enforced.
