Kenya seeks public comment on draft VASP rules covering licensing and stablecoin backing

Kenya’s National Treasury published a draft of operational rules for the country’s virtual asset sector on Wednesday, outlining licensing, reserve, and disclosure requirements for crypto firms, according to a regulatory impact statement released alongside the proposal.

The 2026 Regulations, issued under the Virtual Asset Service Providers Act that took effect Nov. 4, 2025, are open for public comment until April 10, according to a government notice. 

The draft rules stem from a multi-agency task force formed in consultation with the Central Bank of Kenya and the Capital Markets Authority. Their development follows Kenya’s February 2024 grey listing by the Financial Action Task Force, which cited deficiencies in the country’s anti-money laundering and counter-terrorism financing framework. The FATF had proposed the adoption of a legal framework for licensing and supervising virtual asset service providers as one of several required actions.

Specific draft provisions cited by local journalist Julians Amboko suggest stablecoin issuers would be required to maintain at least 30% of funds received in segregated accounts at commercial banks domiciled in Kenya, with remaining reserves invested in secure, low-risk assets within the country that qualify as high-quality liquid assets.

Eligible reserve assets for backing stablecoins are reportedly limited to cash, central bank reserve deposits, bank deposits, government securities with residual maturity of 90 days or less, and repurchase agreements with a maturity of no more than seven days backed by cash or central bank deposits.

According to Amboko, the regulations also introduce transaction-based fees for digital asset platforms. Token issuance platforms would be subject to a 0.05% transaction fee, payable by each counterparty in a facilitated transaction, while initial virtual asset offerings would carry a proposed levy of 0.5% of the value of a successful offer.

Licensing and definition of virtual assets 

Licensing provisions in the draft expand eligibility to include limited liability partnerships, widening the scope from the original bill, which limited applications to companies, according to Amboko. The regulatory authority would have 90 days to provide feedback to license applicants. License validity would shift from a fixed Dec. 31 expiration to 12 months measured from the date of issuance.

Additionally, the draft appears to broaden the definition of a virtual asset to include “digital representation of value that is intended to represent a real-world asset on blockchain or any other technology, whether cryptographically-secured or otherwise.” The definition of an issuer has also been expanded to cover any natural or legal person that creates or makes crypto-assets available to the public, whether through an initial offering or a subsequent issuance mechanism.

The draft also reportedly mandates that all virtual asset service providers open and operate a bank account in Kenya. It also requires system audits once every two years, conducted by a certified IT auditor, to assess digital infrastructure, data security, transaction integrity, cybersecurity preparedness, and operational resilience.

The National Treasury has scheduled public participation forums across 11 venues in Mombasa, Kisii, Kisumu, Makueni, Kirinyaga, Kakamega, Garissa, Kitale, Meru, Nakuru, and Nairobi.