Kenya has taken a bold leap into the digital finance frontier with the passage of the Virtual Asset Service Providers (Vasp) Bill, 2025 into law.
For a country where millions already trade cryptocurrency informally, this legislation is long overdue. But as the ink dries, the real question emerges: does this new act merely regulate the present, or does it boldly anticipate the future?
The law introduces a multi-agency framework involving the Central Bank of Kenya (CBK), Capital Markets Authority (CMA), and Communications Authority (CA). These institutions will now license crypto exchanges, custodial wallet providers, and token issuers. They will enforce anti-money laundering rules, monitor cybersecurity standards, and protect consumers from fraud and asset loss.
Token launches, referred to as Initial Virtual Asset Offerings (IVAOs), will be treated like securities, requiring full disclosures and regulatory approvals. This clarity is welcome. For years, crypto entrepreneurs operated in a fog of regulatory uncertainty, while consumers faced scams and volatility without recourse.
The bill’s provisions on IVAOs align Kenya with global best practices and could help the country exit the Financial Action Task Force (FATF) greylist. The reduction of digital asset tax from three percent to 1.5 percent is also a smart move to encourage compliance and growth.
Yet for all its strengths, the law has blind spots that deserve attention.
First, it leans heavily toward compliance, potentially stifling innovation. There’s no mention of regulatory sandboxes, safe zones where startups can test new ideas, or tiered licensing for small-scale innovators. In a space where agility is key, this could deter the very talent Kenya hopes to attract.
Second, it is silent on decentralised finance (DeFi), a fast-growing realm where users trade, lend, and borrow without intermediaries. Nor does it define how to regulate or tax non-fungible tokens (NFTs), which are unique digital assets used in art, music, gaming, real estate, and education.
Globally, NFTs are used to verify land ownership, certify academic credentials, and reward loyal customers. Kenya’s law doesn’t yet clarify whether NFTs are collectibles, securities, or intellectual property, and that matters.
Third, the law remains domestically siloed. Crypto is borderless, but the law doesn’t link to African Continental Free Trade Area (AfCFTA) protocols or global frameworks like the EU’s MiCA. Without cross-border alignment, Kenyan crypto firms may struggle to scale regionally or attract foreign investment.
Fourth, it misses a chance to connect with Kenya’s broader digital transformation agenda. There’s no integration with the Maisha Namba digital ID system, nor with the Central Bank’s own exploration of a Central Bank Digital Currency (CBDC). These links are crucial for building a seamless digital economy.
So, what’s the global picture?
According to the IMF and World Economic Forum, crypto has already reshaped parts of the global economy. El Salvador made Bitcoin legal tender in 2021, boosting tourism and attracting over $250 million in crypto-related foreign direct investment.
Nigeria, Africa’s largest crypto market, saw over $3 billion in crypto transactions in 2022, helping bypass costly remittance channels. The UAE and Singapore have used crypto-friendly policies to attract billions in fintech investment, positioning themselves as global hubs.
These examples show that crypto can drive financial inclusion, foreign investment, and digital innovation,but only with smart, forward-looking regulation.
Kenya’s VASP law is a strong foundation. But to truly lead, we must go further. Amend the law to include NFTs and DeFi. Create a sandbox for innovators. Align with global standards. And educate the public to build trust and understanding.
Crypto is not just a trend, it’s a new layer of the economy. Kenya must not just regulate it. We must shape it.