Kenya Moves to Regulate Cryptocurrency Industry with Multi-Agency Framework

Kenya is moving closer to establishing regulations for the cryptocurrency industry, with Members of Parliament (MPs) expressing support for a government plan to oversee crypto operations. The National Assembly’s Finance Committee, endorsed by the full House, has proposed a multi-agency framework to supervise virtual asset service providers (VASPs). This framework includes the Central Bank of Kenya, Capital Markets Authority, Competition Authority of Kenya, Communications Authority of Kenya, and the Office of the Data Protection Commissioner.

The proposal, initially suggested by a social enterprise organization called Credence Africa, aims to create a cross-sectoral regulatory unit. This unit will oversee various aspects of VASPs’ operations, including market conduct, data protection, and digital communications infrastructure. The Finance Committee has opened the proposal for public comments, indicating a collaborative approach to developing the regulatory framework.

The joint regulatory unit could also include additional institutions designated by the Cabinet Secretary through a gazette notice. This flexibility ensures that the regulatory framework can adapt to the evolving needs of the cryptocurrency industry. The proposal has received strong backing from crypto players since its introduction to Parliament on April 4, 2025.

The Virtual Assets Chamber (VAC), Kenya’s leading policy think tank for blockchain and virtual assets, has recommended deleting a clause in the legislation – the Virtual Asset Service Providers Bill, 2025. The VAC argued that the provision, which grants the regulatory authority to conduct off-site surveillance, was “overly prescriptive” and lacked clear definitions or boundaries. The Financial Commission has agreed to abide by the VAC’s recommendation, demonstrating a commitment to refining the regulatory framework based on expert input.

In Kenya, VASPs have faced challenges in accessing banking services due to an advisory issued by the Central Bank cautioning financial institutions against dealing with crypto-related businesses. However, the introduction of the Bill signals a significant transformation in the Kenyan virtual asset landscape. The proposal requires all crypto providers to open and maintain a bank account within Kenya, addressing issues of transparency and accountability. If passed, the Bill would make Kenya the third African nation, after Nigeria and South Africa, to have a crypto-specific law.