Kenya Proposes Stricter Regulations for Crypto Firms Amid Growing Digital Asset Market

The Kenyan government has taken a significant step towards formalizing its digital asset market by releasing draft guidelines for crypto firms.

According to the National Treasury's proposal, companies dealing in virtual assets will be required to hold substantial capital reserves to mitigate risk and ensure compliance with regulations. This includes a maximum threshold of Sh500 million ($3.85 million) for stablecoin issuers and varying levels of paid-up capital ranging from Sh2.5 million to Sh500 million depending on the service offered.

The new draft regulations aim to provide a legal framework for licensing and regulating virtual asset service providers in Kenya, with an emphasis on protecting consumers and preventing financial crimes such as money laundering. In addition to meeting capital requirements, companies will be subject to annual or renewable licensing fees ranging between KSh100,000 ($773) and KSh2 million ($15K).

The National Treasury's move is expected to have far-reaching implications for Kenya's crypto sector, which has grown significantly in recent years. According to the 2025 World Crypto Ranking report by Bybit, Kenya ranks fifth globally for crypto use behind Ukraine, the USA, Nigeria, and Vietnam. While the capital requirements may boost trust in the sector, they may also limit new entrants for startups, particularly those with lower financial reserves.

The draft guidelines have sparked debate among industry stakeholders regarding the operational costs associated with compliance. The report highlights that maintaining a physical office in Kenya will be mandatory for crypto exchanges, and directors/senior officers will need to undergo background assessments by regulators.