Kenya’s Parliament has passed the Virtual Asset Service Providers Bill, 2025, establishing the country’s first comprehensive framework for licensing and supervising cryptocurrency businesses.
Lawmakers, however, removed a controversial clause that would have given a Binance-linked lobby group — the Virtual Asset Chamber of Commerce (VACC) — a seat on the proposed national crypto regulator.
Why it matters
The move creates a multi-agency oversight system under existing regulators — the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) — instead of forming a new Virtual Assets Regulatory Authority (VARA).
The decision addresses concerns from the Financial Sector Regulators Forum, which warned that creating a separate authority could lead to overlapping mandates and regulatory confusion.
Key provisions:
- Licensing: All crypto firms must be licensed by the relevant regulator.
- Local presence: Firms must maintain a physical office in Kenya and appoint at least three natural-person directors.
- Consumer protection: Companies must segregate customer assets, hold accounts in Kenyan banks, and conduct regular IT audits.
- AML/CFT compliance: Mandatory anti–money-laundering and data protection frameworks.
- Penalties: Violations may attract fines up to KSh 25 million or five years in prison.
- Grace period: Existing operators have 12 months to comply.
The backstory
Earlier drafts of the bill proposed a new regulator with VACC board representation — a move critics said was an attempt at “regulatory capture” by Binance. Parliament struck out the clause before the final vote.
Although the Treasury retains the option to re-establish a standalone authority later, the new framework prioritizes coordination among existing institutions.
The bigger picture
The law aligns Kenya with global anti–money-laundering standards, as the country works to exit the Financial Action Task Force (FATF) gray list.
While stablecoins were discussed during consultations, the final bill treats them like other crypto assets — a cautious approach meant to avoid destabilizing the financial system.
What’s next
Once President William Ruto signs the bill, Kenya will join South Africa and Mauritius as one of the few African nations with a full-fledged crypto regulatory framework meeting international standard.
Source: Kenyan Wallstreet
