Kenya’s National Treasury has introduced the Virtual Asset Service Providers Bill, 2025, which seeks to regulate cryptocurrency firms. The bill requires crypto companies to establish physical offices in Kenya, apply for licenses, and have their executives and board members vetted by regulators.
Details of the Proposed Law
The Capital Markets Authority (CMA) and the Central Bank of Kenya (CBK) will oversee the regulation of crypto firms. To obtain a license, companies must have a physical location, maintain accessible records, and comply with specific documentation requirements for regulatory review.
The bill reflects a shift in the Kenyan government’s stance on cryptocurrency, moving away from skepticism as digital assets like Bitcoin and Ethereum gain widespread popularity, including acceptance by governments globally.
Regulators on their end will assess applications by examining compliance with cybersecurity standards, as outlined under Kenya’s Computer Misuse and Cybercrimes Act. This includes measures to prevent illegal activities like money laundering and protect user data.
Then, licenses will be issued after evaluating the size, complexity, and scope of the crypto firm, as well as its technology and safeguards against risks like financial fraud or data breaches. Firms must demonstrate expertise and reliability.
The government also intends to play an active role in overseeing crypto firms’ leadership. Executives and directors will be vetted to ensure they are qualified, and directors can only serve on one company board at a time. Regulators may set criteria for CEO appointments to ensure proper governance.
Now, The proposed bill emerges as cryptocurrencies gain significant traction globally. After the Kenya Revenue Authority (KRA) successfully collected taxes from the sector, the government aims to strengthen its oversight of digital finance. However, the decentralized nature of cryptocurrencies poses challenges to government control.
It’s also worthy to note that requiring crypto firms to have physical offices may be problematic. Many global crypto companies operate without traditional offices or headquarters, as their operations are often decentralized. This requirement clashes with the principles of cryptocurrency.
Regulating digital assets as well is complicated by the rapid evolution of technology compared to the slower pace of government policy-making. Traditional regulatory methods designed for physical or fiat assets may not be effective for digital currencies, which transcend physical boundaries.
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