In June 2025, Kenya’s National Assembly took a significant step toward regulating the country’s fast-growing crypto ecosystem with the release of a comprehensive report on the Virtual Asset Service Providers (VASP) Bill, 2025 (Bill No. 15 of 2025).

The report, compiled by the Departmental Committee on Finance and National Planning, outlines extensive stakeholder feedback and critical amendments that bring the Bill in line with global best practices while tailoring it to Kenya’s unique regulatory and innovation landscape.

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TL;DR: What This Means for Crypto in Kenya

  • Kenya is moving toward a modern, risk-based crypto framework.

  • A joint regulatory authority will harmonize oversight and minimize red tape.

  • The law recognizes a wide range of digital assets while prioritizing consumer protection.

  • Licensing processes have been tailored for startups and innovators.

  • Public consultation has been instrumental in future-proofing the law.

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Here’s a breakdown of the most important changes and insights from the report:

 

1. Clearer Definitions and Expanded Scope

The Committee refined several technical definitions to ensure legal clarity and global alignment. Key updates include:

  • Stablecoins: The committee retained a future-proof definition but rejected overly broad alternatives like “asset-referenced tokens.”

  • Virtual Assets: The definition now includes tokenized real-world assets and stablecoins.

  • E-money: The outdated definition was deleted entirely as it was not used in the Bill.

  • Custodial Wallets: Proposed expansive definitions were considered but ultimately deemed covered by existing language.

  • Virtual Service Tokens: Definitions were updated to exclude tokens used for payments or speculation, ensuring proper regulatory boundaries.

 

2. Regulatory Clarity and Structure

One of the most significant reforms is the creation of a joint Virtual Assets Regulatory Authority (VARA):

  • VARA Composition: Will include the Capital Markets Authority (CMA), Central Bank of Kenya (CBK), and potentially other regulators like the Data Commissioner and the Communications Authority.

  • Rationale: This eliminates jurisdictional overlap and provides a “one-stop shop” for licensing and compliance.

 

3. Balanced Licensing Framework

The report introduces tiered and rolling licensing systems to ease administrative burdens and support startups:

  • Rolling Validity: Licenses will now be valid for 12 months from the date of issue, not just until December 31st.

  • Renewals & Grace Periods: A 90-day grace period is allowed for renewals, with pro-rated fees proposed.

  • Simplified Entry: Acknowledging the nascency of the sector, micro-entities may operate under sandbox regimes, although the Bill still restricts natural persons from operating as VASPs.

 

4. Consumer Protection and Market Integrity

Multiple updates reinforce consumer safety, AML compliance, and transparency:

  • Mandatory Public Registers: The CMA must maintain a digital, searchable database of licensed VASPs.

  • Fit and Proper Tests: Now include scrutiny of data protection, financial responsibility, and past regulatory violations.

  • Conflict of Interest Controls: Strengthened through disclosure obligations and internal control frameworks.

 

5. Licensing for Emerging Use Cases (e.g., Betting)

The committee resisted pressure to create special provisions for virtual assets in betting and gaming. Instead:

  • Betting use cases are acknowledged as part of broader virtual asset definitions.

  • Regulation of such activities is deferred to the principal Betting, Lotteries and Gaming Act.

 

6. Public Participation Was Robust

The Committee engaged nine key stakeholders

Each provided line-by-line proposals, many of which were adopted – proving the impact of civic and industry engagement in shaping crypto policy.

 

Next Steps:

The Bill will proceed to the full House with these amendments. If passed, Kenya could position itself as a continental leader in balanced crypto regulation – striking a fine line between innovation and oversight.

 

 

 

Stay tuned to BitKE for deeper insights into the evolving global crypto regulatory space.

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