- Kenya's draft VASP rules propose minimum stablecoin issuer capital of KES 500M (~$3.86M).
- The Virtual Asset Association of Kenya warns the thresholds could lock out local startups.
- Public comment closes April 10, 2026, ahead of formal gazetting and licensing.
- CBK and CMA will jointly oversee licensing once regulations are finalized.
Kenya National Treasury has proposed sweeping licensing rules for virtual asset service providers that industry groups warn could effectively concentrate the market among a handful of well-capitalized firms, leaving smaller operators with little viable path to compliance.
The Draft Virtual Asset Service Providers Regulations, 2026, published March 17, sets minimum capitalization thresholds across license categories. The most contentious: stablecoin issuers would be required to hold paid-up capital of at least 500 million Kenyan shillings, roughly $3.86 million, a bar that startups and domestic technology firms say is prohibitive by design.
A Market at Risk of Concentration
The Virtual Asset Association of Kenya, representing around 50 firms, called the proposed thresholds potentially damaging to the sector’s competitive structure. The association argued that requirements set at this level would drive local innovation offshore or push retail users toward unlicensed platforms, precisely the outcome the regulations are meant to prevent.
Beyond capitalization, the draft rules require VASPs to segregate client funds from operational accounts and establish a dual oversight framework under both the Central Bank of Kenya and the Capital Markets Authority.
Treasury has positioned the framework as an investor protection measure in a market that has seen documented fraud and operational instability.
Kenya moved to close the regulatory gap in October 2025, when Parliament passed the Virtual Asset Service Providers Act, signed into law the same month by President William Ruto. That legislation required Treasury to produce operating regulations before any firm could receive a formal license, making the current draft a critical piece of the country’s emerging crypto framework.
Timeline and What Comes Next
The draft regulations are open for public comment through April 10, 2026. Treasury and a multi-agency task force will then finalize the text before gazettal, after which the CBK and CMA will begin processing license applications from exchanges, wallet providers, and related service businesses.
The central question now is whether the comment process will produce meaningful revisions to the capital thresholds, and whether regulators will offer smaller operators a phased compliance pathway. Those outcomes will determine which firms can realistically enter Kenya’s regulated virtual asset market, and which cannot.
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