KENYA Law and Practice Contributed by: Keega Gakuua, Faith Njeri Njaggah and Alphonse Odido, Keega & Company Advocates
Keega & Company Advocates Westpark Suites, Suite 204 Nairobi Kenya Tel: +254713451503 Email: info@keegalegal.com Web: Keegalegal.com
1. Overview of Blockchain and Crypto- Assets 1.1 Blockchain 1.1.1 Evolution of Uses of Blockchain Recent Developments Over the past 12 months, blockchain use in Kenya has accelerated significantly, transitioning from a grey area to a strategically important, regulated sector. The developments are marked by key legislative mile- stones, major infrastructure projects, and the entry of international players, driven by formal adoption across both public and private sectors. The past year has seen the establishment of foun- dational legal and technical infrastructure for digital assets. Passage of the VASP Act: The Virtual Asset Service Providers Act, 2025 (the “VASP Act”), came into force on 4 November 2025, ending a period of legal uncer- tainty. This Act mandates that any entity offering vir- tual asset services “in or from Kenya” must obtain a licence, bringing the previously unregulated market under formal oversight. In addition, the Act also pro- vides a moratorium of 12 months for existing VASPs to operate as the licensing framework is finalised. Draft VASP Regulations: To operationalise the VASP Act, the draft VASP Regulations, 2026 (“the Regula- tions”) were published for public consultation in March 2026 (closing on 10 April 2026). These regulations pro- pose specific capital requirements, governance rules (including “fit and proper” tests for directors), and a dual-regulator model where the Central Bank of Kenya
(CBK) and the Capital Markets Authority (CMA) are the primary regulators. In practice, the market is transitioning away from pure- ly peer-to-peer and remittance-driven activity. With licensing expected to commence following finalisa- tion of the regulations, increased participation from institutional investors is anticipated. Current Use Cases The use cases currently being explored in Kenya are best categorised by the regulated activity and the relevant regulator. The CBK regulates stablecoin issuance, virtual asset payment services, and initial coin offerings, while the CMA regulates virtual asset exchanges, advisers, managers and brokers, tokeni- sation of real-world assets, and virtual asset wallet providers. The VASP regime only applies to “virtual assets”, defined as a digital representation of value that can be digitally traded or transferred and can be used for pay- ment or investment purposes. The definition expressly excludes digital representations of fiat currencies, securities, and other financial assets. This implies that utility tokens and the use of blockchain technology in a use case do not trigger the VASP regime, provided the token does not function as a payment or invest- ment instrument. Consequently, many blockchain- based applications, particularly those involving pure utility tokens or non-financial use cases, fall outside the regulatory perimeter of the VASP Act.
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