National Assembly passes Bill requiring cryptocurrency firms to obtain licenses
The law mandates that only registered companies can offer virtual asset services and introduces measures to safeguard client funds.
Cryptocurrency service providers will be required to obtain licenses in Kenya after the National Assembly passed the Virtual Asset Service Providers Bill, 2025, in a move aimed at regulating digital finance and protecting investors.
The law mandates that only registered companies can offer virtual asset services and introduces measures to safeguard client funds, enhance transparency and prevent fraudulent practices in the growing digital finance market.
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The Bill, formally cited as National Assembly Bill No. 15 of 2025, establishes a comprehensive legal and regulatory framework for Virtual Asset Service Providers (VASPs) operating in or from Kenya. It seeks to promote innovation in digital finance while ensuring consumer protection and maintaining the integrity of the financial system.
If enacted, any person or company offering virtual asset services must obtain a license from a designated regulatory authority, which may include the Capital Markets Authority (CMA), the Central Bank of Kenya (CBK), or a newly proposed Virtual Assets Regulatory Authority. The licensing framework ensures that all operators comply with anti-money laundering, consumer protection and data privacy requirements.
“This Bill seeks to provide a legislative framework to regulate virtual asset service providers and address potential risks associated with the misuse of virtual asset products and virtual asset services. The Bill designates the Capital Markets Authority and the Central Bank of Kenya as the primary regulatory authorities for virtual assets services and virtual assets service providers in Kenya,” reads the Bill.
The Bill defines a “virtual asset service provider” as a company licensed under the Act to conduct virtual asset services. Only companies limited by shares—local or foreign entities registered under the Companies Act- are eligible to apply for a license.
To protect investors, Part IV mandates that VASPs maintain adequate safeguards for client assets, secure appropriate insurance cover and maintain bank accounts in Kenya for effective monitoring and oversight. The Bill also requires service providers to establish internal policies for managing conflicts of interest and maintain detailed operational records to prevent fraudulent activities and financial losses similar to those seen in unregulated platforms.
Part V of the Bill strengthens enforcement by granting regulatory authorities powers to supervise, inspect and impose penalties for non-compliance. It also allows collaboration with other competent authorities to promote financial stability and enhance international cooperation in combating illicit financial flows.
The legislation aligns key definitions and compliance obligations with international financial standards. Notably, it expands anti-money laundering regulations to cover financing of terrorism and proliferation (AML/CFT/CPF). The Bill also clarifies that virtual service tokens are not classified as virtual assets under the Act, meaning entities dealing exclusively in such tokens will not require licensing.
Once enacted, the Virtual Asset Service Providers Bill, 2025, is expected to create a transparent and secure environment for digital financial activities, protect public interests and attract investment into Kenya’s fast-evolving fintech sector.
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