Virtual Asset Service Providers Bill 2025

Virtual Asset Service Providers Bill 2025 | WKA Advocates Kenya

By admin
November 4, 2025

Regulating the Digital Frontier: The Virtual Asset Service Providers Bill, 2025

By WKA Advocates — Kenya’s Digital Finance & Blockchain Law Experts

A New Era for Digital Finance in Kenya

“Most of the young people between 18 and 35 years of age are now using virtual assets for trading, settling payments and as a way of investment or doing business.”
— Hon. Kuria Kimani, MP

These words capture the heartbeat of Kenya’s digital economy, where cryptocurrencies, NFTs, and stablecoins have become everyday tools of trade and investment.
As blockchain adoption in Kenya accelerates, the need for a robust legal framework to protect users and ensure financial integrity has become urgent.

According to UNCTAD and Business Daily Africa, over 4.25 million Kenyans (≈ 8.5 %) now own cryptocurrencies, while Chainalysis reports that Kenya processed USD 7 billion in crypto transactions in 2024 — one of the highest in Africa.
Stablecoins alone accounted for KES 426.4 billion (USD 3.3 billion) in cross-border remittances and online trade.

Birth of the Virtual Asset Service Providers (VASP) Bill, 2025

On 4 April 2025, Parliament tabled the Virtual Asset Service Providers Bill, 2025 — a groundbreaking step toward regulating digital asset exchanges, wallet providers, and crypto custodians in Kenya.
Following extensive stakeholder engagement and debate, the Bill was assented to by the President on 15 October 2025, officially ushering in a new regulatory era.

Once operational, Kenya will join South Africa, Namibia, and Mauritius in establishing a formal virtual asset legal framework, positioning itself as East Africa’s digital finance hub.

What Are Virtual Assets?

The Bill defines a virtual asset as “a digital representation of value that can be digitally traded or transferred and used for payment or investment purposes” — excluding fiat currency, e-money, and securities.
Common examples include Bitcoin, Ethereum, NFTs, and gaming tokens.
This aligns with global trends under the Financial Action Task Force (FATF) guidelines on virtual assets and Virtual Asset Service Providers (VASPs).

Objectives of the Bill

The Bill seeks to:

Encourage technological innovation and digital financial inclusion.
Safeguard financial stability, market integrity, and investor protection.
Align Kenya’s policy with international anti-money-laundering (AML) and counter-terrorism financing (CFT) standards.
Promote transparency, data protection, and consumer education in virtual asset transactions.

Key Highlights of the Virtual Asset Service Providers Bill

1. Licensing and Registration of VASPs

All entities providing digital asset services must be licensed by the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA).
A Virtual Asset Service Provider (VASP) must be either:

A company incorporated under the Companies Act (Cap 486); or
A foreign company with a valid certificate of compliance.

2. Dual Regulatory Oversight

The CBK and CMA share responsibility for licensing, supervision, and monitoring VASPs, ensuring coordination between the banking and capital markets sectors.

3. Financial Integrity & AML Compliance

The Bill adopts global best practices against money laundering, terrorism financing, and proliferation risks.
All VASPs must perform Know Your Customer (KYC) checks, report suspicious transactions to the Financial Reporting Centre (FRC), and vet their directors, shareholders, and beneficial owners.

4. Cybersecurity and Data Protection

VASPs must implement robust cybersecurity frameworks, ensure confidentiality of customer data, and comply with the Data Protection Act 2019.

Duties and Obligations of Virtual Asset Service Providers

Under the new law, VASPs must:

Maintain accurate records of all virtual asset transactions.
Conduct customer due diligence and risk assessment.
Establish consumer education programmes on digital asset risks.
Ensure officers are fit and proper persons for the role.

These provisions enhance market integrity and consumer trust, strengthening Kenya’s position as a digital finance innovation hub.

Comparative Analysis: Kenya vs South Africa, Namibia & Mauritius

🇿🇦 South Africa

Governed under the Financial Advisory and Intermediary Services Act (FAIS), the Financial Sector Conduct Authority (FSCA) oversees crypto assets, with the Financial Intelligence Centre (FIC) handling AML enforcement.
South Africa integrates crypto assets within existing financial laws, while Kenya’s Bill creates a standalone framework with joint CBK & CMA oversight.

🇳🇦 Namibia

The Virtual Assets Act 2023 places oversight with the Bank of Namibia. Kenya’s VASP Bill adopts a broader joint regulatory model, signaling greater coordination and cross-sector innovation potential.

🇲🇺 Mauritius

The Virtual Asset and Initial Token Offering Services Act 2021 established the Financial Services Commission (FSC) as supervisor. Kenya’s approach mirrors this but adds CMA integration to capture both banking and capital markets activity.