The Virtual Asset Service Providers Act, 2025 (the Act) came into force following presidential assent on 15 October 2025, marking a crucial evolution in Kenya’s regulatory approach to virtual assets. The Act departs from the position established in 2015 by the Central Bank of Kenya (CBK) in its Banking Circular which advised that virtual currencies were unregulated, not legal tender, and cautioned financial institutions against transacting with entities dealing in such currencies.
Key Provisions
This landmark piece of legislation establishes a comprehensive legal framework aimed at licensing and regulating the activities of Virtual Asset Service Providers (VASPs) operating in and from Kenya. The Act is structured to define the confines of regulate d activity, designate supervisory authorities, impose licensing and fit-and-proper requirements, and create an enforcement regime that integrates VASPs into the existing regulatory architecture.
Scope of the Act
At the core of the Act is a clear delineation of scope. The Act defines a “virtual asset” as a digital representation of value that can be digitally traded or transferred and used for payment or investment purposes, specifically excluding digital representations of fiat currencies, securities, and other financial assets. Furthermore, certain non -transferable tokens within a closed ecosystem, digital representations of fiat currencies issued by central banks, and certain non -fungible tokens (NFTs) are explicitly excluded from the Act's application.
Designation of Regulatory Authorities and Scope
The Act establishes a dual -regulatory architecture by designating the Capital Markets Authority (CMA) and CBK as the primary supervisors for different categories of activity, with the Cabinet Secretary of the National Treasury empowered to designate additional authorities by notice in the Kenya Gazette.
The regulatory mandate is divided across various virtual asset activities. This allocation of responsibilities separates market -facing functions (exchanges, tokenisation and investment services) and payment -oriented functions (stablecoin issuance, payment processors and custodial wallets) to ensure sectoral expertise drives supervision. CBK is responsible for virtual asset wallet providers (specifically custodial services), virtual asset payment processors and stablecoin issuance. On the other hand, the CMA is responsible for virtual asset exchanges (covering transfer, conversion, trading, clearing, and settlement platforms), virtual asset brokers, virtual assets investment advisors, virtual asset managers, virtual asset offering providers, virtual asset tokenisation, and token issuance platforms.
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