Kenya has taken a major step in regulating digital assets with the Virtual Asset Service Providers Act, 2025, which came into effect on 4 November 2025. Gazetted on 21 October, the Act establishes a clear legal framework for virtual asset service providers (VASPs) operating in or from Kenya.
The Central Bank of Kenya (CBK) and Capital Markets Authority (CMA) are the designated regulators, responsible for licensing, supervision, and ensuring compliance with governance, cybersecurity, and anti-money laundering standards. Only licensed VASPs will be allowed to operate, aligning Kenya with global best practices in digital asset regulation.
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However, according to the recent joint public notice by CBK and CMA, no licenses have yet been issued, as the detailed regulations for licensing are still in development. Businesses operating in virtual assets must await these regulations before seeking formal approval.
The Act covers a wide range of services, including wallets, exchanges, trading, custody, and token issuance. Licensed providers will be expected to meet strict fit-and-proper requirements, maintain sufficient capital, and implement robust consumer protection measures.
With the Act now in force, the next step is the creation of detailed subsidiary regulations to provide operational guidance. These regulations will define practical requirements such as capital thresholds for different types of VASPs, licensing fees, standard application processes, eligibility criteria for key personnel, compliance and reporting obligations, consumer protection standards, and risk management expectations.
To ensure a smooth transition, the Act allows for a 12-month period of continuity for existing virtual asset operators. This gives businesses time to prepare for the new compliance standards while regulators finalise the detailed rules for licensing and oversight.
