Kenya Unveils Sweeping Crypto Rules Targeting Licensing, Stablecoin Reserves

Kenya is taking a decisive step toward regulating its fast-growing digital asset market, with the National Treasury of Kenya releasing a draft framework that sets out strict operational rules for crypto firms. The proposed 2026 regulations outline licensing procedures, reserve requirements, and disclosure obligations aimed at bringing clarity and oversight to the sector.

Published alongside a regulatory impact statement, the draft rules fall under the Virtual Asset Service Providers Act, which came into force in November 2025. Authorities have opened the proposal for public consultation until April 10, signalling a collaborative approach as Kenya works to strengthen its financial system.

Source: Kenya Treasury 

Stablecoin reserves and new fee structure

A major highlight of the draft is its firm stance on stablecoin backing. Issuers would be required to hold at least 30% of customer funds in segregated accounts within Kenyan commercial banks. The remaining reserves must be invested in low-risk, high-quality liquid assets such as short-term government securities, bank deposits, and repurchase agreements.

This move aligns with global efforts to ensure stablecoin stability and consumer protection. It also follows scrutiny from the Financial Action Task Force, which placed Kenya on its grey list in February 2024 over gaps in anti-money laundering and counter-terrorism financing controls.

The draft further introduces transaction-based fees across the ecosystem. Digital asset platforms facilitating token trades would face a 0.05% fee per transaction for each party involved, while initial virtual asset offerings could attract a 0.5% levy on successful raises, potentially reshaping fundraising dynamics in the country’s crypto space.

Broader licensing scope and compliance demands

The proposed rules significantly expand who can participate in the market. Unlike earlier provisions limited to companies, licensing eligibility now includes limited liability partnerships, widening access for startups and innovators. Regulators would have a 90-day window to respond to applications, with licenses valid for 12 months from issuance.

In addition, the definition of virtual assets has been broadened to include any digital representation of value tied to real-world assets, whether cryptographically secured or not. This reflects a growing recognition of tokenized assets beyond traditional cryptocurrencies. 

Crypto firms would also be required to maintain local bank accounts and undergo mandatory system audits every two years. These audits would assess cybersecurity readiness, data protection, and operational resilience, key pillars for building trust in the sector. Public participation forums are scheduled across major cities, including Nairobi and Mombasa, as Kenya seeks industry and citizen input before finalizing the rules.