Kenya Introduces Comprehensive Cryptocurrency Regulations

Kenya has taken a significant step towards regulating its cryptocurrency sector with the introduction of draft regulations.

The proposed framework is aimed at addressing international compliance concerns, particularly those raised by the Financial Action Task Force (FATF), which listed Kenya in its gray list in February 2023.

The draft regulations introduce mandatory licensing requirements for all cryptocurrency service providers operating within the country. This includes virtual asset service providers, such as exchanges and wallet providers, that must obtain operational licenses to operate legally.

In addition to licensing requirements, the proposed framework mandates regular security audits for crypto exchanges and wallet providers. These measures directly respond to FATF recommendations regarding anti-money laundering controls.

The draft regulations also establish several key requirements for stablecoin issuers, including maintaining full reserves in Kenyan shillings within locally registered banks. This provision aims to prevent potential liquidity crises and protect consumers.