The journey to the establishment of a legal and regulatory framework for the oversight of the virtual assets environment in Kenya continues apace. The public participation phase of this law-making exercise completed on 29th January, 2025. The National Treasury nonetheless continues to engage stakeholders in workshops as it processes and considers submissions made. Emerging key highlight issues identified by industry include the desire for regulatory clarity and oversight and reasonable taxation and compliance measures that will serve to encourage development of the blockchain and crypto ecosystem in Kenya.
The National Treasury had issued a notice inviting the public to share any commentary and proposals on the published Draft National Policy on Virtual Assets and Virtual Asset Service Providers [available here] and the Virtual Assets Service Providers Bill [available here].
While there has been in place a digital asset tax on the transfer and exchange of digital assets (including cryptocurrency) since 1st July, 2023, the virtual assets sector is currently largely unregulated. This is set to change.
The intent is that the Capital Markets Authority and the Central Bank of Kenya shall be the regulatory authorities concerned with the establishment of virtual asset providers and issuers of initial virtual offerings in Kenya; the licensing of virtual asset providers; the approval of issuance of initial virtual asset offering and the regulation of connected matters.
The contemplation is also that only local companies incorporated under the Companies Act or foreign companies issued with a certificate of compliance under the Companies Act will be eligible to apply to be licensed to carry on the business of virtual asset services.
There are a host of provisions covering licensing matters; obligations for virtual asset service providers; prevention of money laundering, terrorism financing and proliferation financing; initial virtual asset offering and enforcement.
We will continue to monitor this law making process.
This alert serves the purpose of general guidance and is not intended to constitute specific legal advice. For legal guidance concerning this alert, please contact our Partners Julius Wako at Julius.Wako@CMS-DI.com or Kevin Kwasa at Kevin.Kwasa@CMS-DI.com.
*Contributors - CMS Kenya Technology, Media & Communications
- Julius Wako, Partner, Head of Practice – Technology, Media & Communications
- Kevin Kwasa, Partner
- Brian Gatuguti, Senior Associate
- Brian Macharia, Associate
- Radhika Bhullar, Associate
