KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Valere Nyaboke, Cliffe Dekker Hofmeyr
General insurance, by contrast, refers to any class or classes of insurance business that are not long‑term insurance business. Insurers that offer both long‑term and general insur - ance must maintain separate capital reserves for each type of business. Additionally, the assets held in support of long‑term insurance policies are strictly protected. These assets exist solely for the benefit of long‑term policyholders and cannot be used to meet liabilities arising from the general insurance side of the business. Regtech providers are currently unregulated in Kenya. However, the evolving regulatory landscape presents a significant opportunity for the introduction of regtech solutions. These solutions may include automated compliance systems capable of monitoring trans - actions in real time, detecting anomalies, ensuring adherence to local regulations, and generating the necessary reports required by regulatory bodies. 9.2 Contractual Terms to Ensure Performance and Accuracy There are no established practices on regtech in Ken - ya. 10. Blockchain 10.1 Use of Blockchain in the Financial Services Industry Kenyan financial institutions have explored various use cases for blockchain within their operations and have sought regulatory approval for blockchain‑linked products. However, there remains limited publicly available information to determine the extent of actual blockchain adoption. 10.2 Local Regulators’ Approach to Blockchain 9. Regtech 9.1 Regulation of Regtech Providers Kenya has made significant strides in regulating block - chain technology and virtual assets. Blockchain can be defined as a digital ledger or database of transac -
tions relating to virtual assets that are recorded chron - ologically and are capable of being audited. The VASPA designates both the CBK and the CMA as key regulatory authorities for virtual assets. The CBK will oversee crypto service providers that offer pay - ment‑ and currency‑related solutions, while the CMA will regulate entities involved in trading, exchange, and initial public offerings of virtual assets. This col - laborative approach marks a shift from the previous stance of caution toward a more structured and pro - active engagement with the crypto industry. 10.3 Classification of Blockchain Assets Blockchain assets (hereinafter “virtual assets”) are considered a form of regulated financial instrument in Kenya. The VASPA provides the regulatory frame - work for virtual assets, defining them as “any digital representation of value that can be digitally traded or transferred and can be used for payment or invest - ment purposes, and does not include digital repre - sentations of fiat currencies, e‑money, securities, or other financial assets.” However, the following types of assets are excluded from regulation under the VASPA. • Digital representations of value or rights that oper - ate within a closed ecosystem of the issuer, includ - ing those that are: (a) non-transferable outside the closed ecosys - tem; (b) non-exchangeable for real‑world goods, services, discounts, or purchases outside the closed ecosystem; (c) non-tradeable on a secondary market outside the closed ecosystem; (d) non-saleable on a secondary market outside the closed-loop system; (e) non-usable for payment or investment pur - poses; and (f) non-exchangeable for fiat currency. • Digital representations of fiat currencies, securities, and other financial instruments to the extent that they are regulated by other laws in Kenya. • Digital representations of fiat currencies issued by the CBK or any other jurisdiction.
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