On 17 March 2026, the National Treasury through a Multi-Agency Task Force and in consultation with the Central Bank of Kenya (CBK) and Capital Markets Authority (CMA) published and circulated a public notice inviting members of the public to submit their comments, inputs or memoranda on the draft Virtual Asset Service Providers Regulations, 2026 (draft Regulations). The draft Regulations are issued pursuant to the Virtual Asset Service Providers Act, 2025 (Act) (Act No. 20 of 2025) to operationalise the Act whose objective is to provide a framework for licensing and regulation of virtual assets.
The draft Regulations are therefore still subject to finalisation, and we anticipate that a comprehensive licensing regime for virtual assets in Kenya will follow once they are enacted. This article should be read together with our previous insights of April 2025 and October 2025 in which we summarised the key requirements of the Act itself.
In this news article, we provide a high-level overview of the draft Regulations with a particular focus on its key legal and commercial requirements, as well as the practical steps businesses can take to proactively prepare for compliance. Please see the high-level overview below.
- Licence applications: An application for a licence must be made in the prescribed form (set out in the Second Schedule) and is accompanied by an extensive suite of documentation, including: personal details of directors (qualifications, experience), the senior officers, significant shareholders and beneficial owners; a detailed business plan; fit and proper assessment forms; proof of source of funds; operational policies (covering risk management, Anti-Money Laundering, Combating the Financing of Terrorism, and Countering Proliferation Financing (AML/CFT/CPF), cybersecurity and complaints management), evidence of paid-up and liquid capital; and audited financial statements for the preceding three years (or opening financial statements where applicable). An applicant must also demonstrate adequate human and technology resources and pay the applicable application and licence fees (relevant to the class of virtual assets intended to be traded) as set out in the First Schedule to the draft Regulations.
- Fit and proper requirements: Fit and proper requirements are generally covered under section 18 of the Act. The detailed prescribed forms (set out in the Fourth Schedule) must be completed by each relevant person, covering their personal information, educational and professional qualifications, employment history, past and present business activities, and any history of insolvency, regulatory sanctions, criminal convictions (including for fraud or theft), disqualification from directorship, or dismissal from a position of trust. Each applicant must provide at least three professional referees of good standing and a current credit rating report from a credit reference bureau. For significant shareholders, a sworn declaration that investment funds are not derived from proceeds of crime is also required.
- Capital, shareholding and liquidity requirements: The draft Regulations (set out in Part XI and the Fifth Schedule) prescribe significant minimum capital and liquidity thresholds, which vary depending on the category of virtual asset service providers (VASPs). A licensee must hold the requisite paid-up capital for each licensed activity separately where it holds more than one licence, and core capital must always remain unencumbered. Regarding shareholding, the draft Regulations prohibit any single person from controlling or being beneficially entitled to more than 33.3% of the issued share capital, voting rights, or board appointments in a virtual asset exchange, stable coin issuer, or wallet provider unless that person is a corporate entity with sufficiently diverse ultimate beneficial ownership. Shareholding and ownership changes must be made after obtaining approval from the relevant regulatory authority upon payment of a fee set out in the First Schedule.
- Other requirements – the draft Regulations also provide for notification to regulators of any material events including cybersecurity incidents. They also provide for prohibited market conduct which includes insider trading and market manipulation. To safeguard consumers, licensees are required to put in place complaint procedures and establish customer care systems. Advertisements of virtual assets are also to be regulated.
Looking Ahead
The draft Regulations have been published and circulated for public participation, with submissions due to the National Treasury by 10 April 2026. The draft Regulations are therefore still subject to further amendments and discussions after close of the public participation stage. Thereafter, the draft Regulations will be amended by the Multi-Agency Task Force in consultation with the CBK and CMA pending finalisation by the National Treasury and Cabinet Secretary. As such, we expect the licensing of VASPs in Kenya to commence as soon as the draft Regulations are officially in place.
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Read the original publication at Bowmans
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