KENYA Law and Practice Contributed by: Keega Gakuua, Faith Njeri Njaggah and Alphonse Odido, Keega & Company Advocates
Capital Markets Authority The CMA regulates virtual asset exchanges, brokers, investment advisers, fund managers, tokenisation platforms, and ICO or token offering providers under the VASP Act. Its supervisory approach emphasises market integrity, investor protection, white paper accuracy, and the prevention of market manipulation and insider trading. Central Bank of Kenya The CBK regulates virtual asset payment services, custodial wallet providers, stablecoin issuers, and entities involved in the conversion of fiat currency to crypto-assets. Its approach focuses on monetary stability, payment system integrity, consumer depos- it protection, and the enforcement of reserve and redemption requirements for stablecoins. Office of the Data Protection Commissioner The ODPC enforces compliance with the Data Pro- tection Act, 2019 for blockchain-based businesses that process personal data, including KYC informa- tion and biometric data. Its supervisory approach includes investigating complaints, conducting com- pliance audits, and imposing sanctions for unlawful data processing, as demonstrated in the Worldcoin enforcement action. Financial Reporting Centre (FRC) The FRC is Kenya’s financial intelligence unit, respon- sible for supervising VASPs for AML/CFT compliance under the POCAMLA. It receives and analyses sus- picious transaction reports, conducts inspections of VASPs, and exchanges information with foreign finan- cial intelligence units to combat money-laundering and terrorism financing. Alignment With International Standards The VASP Act and subsequent regulations are explic- itly designed to address the FATF’s expectations, par- ticularly Recommendation 15, which requires coun- tries to license, supervise and enforce anti-money laundering and counter-terrorism financing (AML/CFT) requirements on VASPs. The government has also enhanced its institutional capacity for this purpose, with the CMA acquiring blockchain surveillance tools from Chainalysis for
market oversight and establishing a multi-agency task force to co-ordinate enforcement across the CMA, CBK and investigative bodies. Beyond FATF standards, Kenya is demonstrating its commitment to broader international co-operation. The VASP Act expressly empowers local regulators to exchange information with foreign supervisory and enforcement authorities, addressing the cross-border nature of virtual-asset activities. 2.2 Crypto-Asset Regulatory Frameworks Classification of Crypto-Assets The VASP Act defines a virtual asset as “a digital repre- sentation of value that can be digitally traded or trans- ferred and can be used for payment or investment purposes’’. This classification explicitly excludes digi- tal representations of fiat currencies (such as mobile money or central bank digital currencies (CBDCs)), as well as securities and other financial assets already regulated under existing capital markets laws. Utility tokens and non-fungible tokens (NFTs) are also not included in the Act. The CBK regulates payment-like assets (stablecoins, wallets, payment processors), while the CMA regu- lates investment-like assets (exchanges, tokenised securities, ICOs). The VASP Act Crypto-assets are now subject to the VASP Act, which came into force on 4 November 2025, and its accom- panying draft VASP Regulations, 2026. The VASP Act is a self-contained framework that creates a new cat- egory of regulated financial service providers, rather than retrofitting crypto-assets into older laws. The Act introduces a dual-regulator model: the CBK regulates payment-related crypto-firms, including stablecoin issuers, wallet providers, and payment processors, while the CMA oversees exchanges, brokers, investment advisers, managers, tokenisation platforms, and ICO providers. While the VASP Act is in force, the formal licensing process for virtual asset firms has not yet begun. The process awaits the finalisation of the draft VASP Reg- ulations, 2026, which are expected to be completed
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