Kenyan Parliament passes VASP Bill, establishing a comprehensive legal framework for the crypto-asset market with strict licensing requirements.
Kenya has made significant progress in establishing a regulatory system for the digital asset market as the country’s Parliament officially passed the Virtual Asset Service Providers (VASP) Bill. This is Kenya’s first and most comprehensive legal framework to regulate crypto-asset activities, aiming to protect consumers, increase transparency in the industry and attract investment in the East African country’s burgeoning fintech sector.
Under the newly approved bill, all VASPs operating in Kenya must register and be licensed by one of three designated regulatory bodies. Licensing powers are vested in the Central Bank of Kenya (CBK), the Capital Markets Authority (CMA) and the newly created Virtual Assets Regulatory Authority (VARA). Applicants must be registered as limited liability companies, including foreign companies operating in Kenya.
Strict standards of compliance and investor protection
The bill sets mandatory standards for anti-money laundering (AML), consumer protection, and cybersecurity. Cryptocurrency service providers must keep customer assets completely separate from company assets, maintain risk insurance, and bank accounts with Kenyan banks. They must also develop internal policies to prevent conflicts of interest and maintain detailed records to increase transparency in operations and prevent abuse.
The new law significantly expands the powers of regulators, allowing them to audit VASP operations, conduct on-site inspections, impose sanctions and fines, and suspend or revoke licenses when violations are detected. The law also allows for international cooperation to combat illicit financial flows. The updated version clarifies definitions and compliance requirements in line with international standards on AML, counter-terrorism financing (CFT), and counter-proliferation of weapons of mass destruction (CPF).
A notable point in the law is the clear distinction between virtual assets and virtual service Token . Virtual service Token are not subject to the law and do not require a license if the business is limited to that scope, facilitating different business models in the digital asset ecosystem.
The bill will officially come into effect after being signed into law by President William Ruto. When it does, Kenya will become one of the few African countries with a comprehensive legal framework for digital assets. According to Mr. Kuria Kimani, Chairman of the National Finance and Planning Committee of the National Assembly, the majority of Kenyans aged 18 to 35 are currently using virtual assets for investment, payment and trading. The new legal framework is aimed at ensuring the market becomes safer, more transparent and sustainable.
Kenya is currently among the top five crypto economies in sub-Saharan Africa, with a total on- chain transaction value of around $20 billion between July 2024 and June 2025. The passage of this bill is expected to cement Kenya’s position as a leading digital asset hub in the region.
