Fintech 2026

KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Valere Nyaboke, Cliffe Dekker Hofmeyr

• Non‑fungible tokens (NFTs) that are not used for payment, investment, or any other financial pur - poses. • NFTs which, by their nature and function rather than the designation given by the issuer, are not used for payment or investment purposes and are not a digital representation of any financial asset. • Any other digital representations of value or rights that the relevant regulatory authority expressly excludes. 10.4 Regulation of “Issuers” of Blockchain Assets The CMA considers initial coin offerings to constitute an offer of “securities”, and therefore believes they should fall under its regulatory authority. Under the VASPA, initial coin offerings are classified as a regu - lated activity, meaning they may only be conducted by a licensed virtual asset service provider and must receive approval from the relevant authority. 10.5 Regulation of Blockchain Asset Trading Platforms The VASPA provides the regulatory framework for virtual asset trading platforms. These platforms are centralised services that: • facilitate the trading and exchange of virtual assets for fiat currency or other virtual assets; • hold custody or exercise control over virtual assets on behalf of clients to enable such exchanges; and • purchase virtual assets from a seller when transac - tions or matched bids and offers occur, in order to then sell those assets to a buyer. For further information on the regulation of virtual asset trading platforms, refer to 6.3 Impact of the Emergence of Cryptocurrency Exchanges . 10.6 Staking VASPA introduced a regulatory framework for virtual asset activities. Although the law does not explicit - ly mention staking, its broad definition of regulated “virtual asset services” would likely include staking services. Under VASPA, activities such as provid - ing custodial wallet services, facilitating virtual asset transactions, offering investment advisory services, or

validating transactions require registration or regula - tory approval. Given this scope, staking service providers in Kenya would likely be required to register and obtain the appropriate regulatory approval under VASPA. In addi - tion, these providers would need to comply with the anti‑money laundering and combating the financing of terrorism (AML/CFT) obligations set out in the VASPA. 10.7 Crypto-Related Lending Cryptocurrency lending generally involves providing loans secured by cryptocurrency collateral, facilitating the transfer of cryptocurrencies between lenders and borrowers, and handling loan repayments or distribu - tions. Although the VASPA does not explicitly define cryptocurrency lending, its broad definition of “vir - tual asset services” potentially encompasses several aspects of these activities. • Custodial Wallet Services – platforms that hold cryptocurrency as collateral may fall within this cat - egory. Such platforms would therefore be required to obtain licensing and be subject to regulation by either the CBK or the CMA. • Transfer Services of Virtual Assets – platforms that facilitate the movement of cryptocurrency between lenders and borrowers are likely to be regulated under this category. These platforms would simi - larly be subject to licensing requirements from the CBK or CMA. • Payment Gateway Services – lending platforms that manage loan disbursements or repayments involving cryptocurrency may be regulated by the CBK as payment gateway service providers. This would entail obligations such as customer due dili - gence, transaction monitoring, risk management, and compliance with AML requirements. Given the breadth of these definitions, crypto lending platforms operating in Kenya will likely require reg - istration and regulatory oversight under the VASPA. However, additional regulatory guidance would be needed to clarify the precise applicability of existing financial services and lending regulations to crypto - currency lending activities.

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