Kenya Proposes Joint Regulatory Body for Crypto Industry

Kenya has taken a significant step towards establishing a regulatory framework for the cryptocurrency industry by proposing the creation of a joint regulatory body. This move is part of the nation's broader strategy to position itself as a leader in the African crypto space. The proposal, supported by a parliamentary committee, aims to oversee the operations of digital asset service providers, ensuring that the industry operates within a structured and compliant environment.

The initiative comes at a time when Kenya is witnessing a surge in cryptocurrency adoption. The country has seen an increasing number of individuals and businesses embracing digital assets, driven by the potential for financial inclusion and innovation. However, the lack of a clear regulatory framework has raised concerns about consumer protection, market stability, and the potential for illicit activities. The proposed joint regulatory body is expected to address these issues by providing a comprehensive oversight mechanism that balances innovation with regulatory compliance.

The establishment of a joint regulatory body is a strategic move that aligns with Kenya's ambition to become a regional hub for cryptocurrency and blockchain technology. By creating a conducive regulatory environment, Kenya aims to attract investments, foster innovation, and create job opportunities in the tech sector. This move is also expected to enhance the country's reputation as a forward-thinking nation that embraces technological advancements.

The proposal has garnered support from various stakeholders, including industry players, policymakers, and consumer advocacy groups. Industry players have welcomed the move, citing the need for a clear regulatory framework that provides certainty and reduces the risks associated with operating in an unregulated market. Policymakers have also expressed their support, highlighting the potential economic benefits of a well-regulated crypto industry. Consumer advocacy groups have emphasized the importance of protecting consumers from fraudulent activities and ensuring that the industry operates in a transparent and accountable manner.

However, the proposal has also faced criticism from some quarters, with concerns raised about the potential for over-regulation stifling innovation. Critics argue that a heavy-handed regulatory approach could deter startups and small businesses from entering the market, thereby limiting the industry's growth potential. They have called for a balanced approach that promotes innovation while ensuring regulatory compliance.

Kenya’s proposed Virtual Asset Service Providers (VASP) Bill introduces a 5-agency crypto regulatory framework to license and monitor digital asset providers. The 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. These bodies will collectively regulate various aspects of the crypto ecosystem, including market conduct, data protection, and digital infrastructure.

The proposal stems from a recommendation by Credence Sfrica, a social enterprise organization, which called for a cross-sectoral regulatory team to supervise the rapidly expanding crypto market. The initiative is now open for public feedback, as the Finance Committee aims to build a collaborative and transparent crypto policy. Introduced on April 4, 2025, the VASP Bill has received strong support from key players in the crypto industry. The Virtual Asset Chamber (VAC) praised the bill but recommended removing a controversial clause that allowed regulators to conduct off-site surveillance of VASPs without clear boundaries. The committee agreed with the VAC and has amended the bill accordingly.

Kenya is positioning itself as a crypto leader in Africa, moving past its earlier caution. The new VASP Bill is designed to strengthen financial transparency, accountability, and combat illicit financial flows. Lawmakers believe it will help protect consumers and legitimize the crypto space in the country. If the bill is passed, all entities engaging in crypto operations in Kenya will be required to obtain a local license approved by the five regulatory agencies. These licensed VASPs must also implement internal policies to identify and manage conflicts of interest and report such matters to authorities.

“This Bill puts a strong emphasis on conflict prevention and proper management among virtual asset providers,” said MP Kimani Kuria. “It requires entities to establish effective internal controls to ensure transparency and accountability.”

As Kenya prepares to pass its first comprehensive crypto regulation, it sends a clear signal of intent: the nation is serious about embracing digital finance while safeguarding its citizens. If implemented successfully, this could place Kenya at the forefront of Africa’s blockchain revolution.