For years, Kenya’s crypto market operated in a legal grey zone. Investors traded Bitcoin and Ethereum on unregulated platforms, exchanges ran without licences, and consumers had no formal protections. That changed in November 2025.
The Virtual Asset Service Providers Act (VASPA), 2025, officially Act No. 20 of 2025, was assented to by the President on October 15, 2025, and came into force on November 4, 2025. It is Kenya’s first comprehensive law governing the cryptocurrency and digital asset industry.
Here’s what it means, in plain language.
What Is VASPA?
VASPA is the law that brings Kenya’s crypto sector under formal regulation. Its core purpose is to license, regulate, and supervise virtual asset service providers operating in or from Kenya, including crypto exchanges, wallet providers, token issuers, payment processors, and custody services.
Before VASPA, operating a crypto exchange in Kenya was technically unregulated. Now, those businesses must apply for a licence or risk criminal penalties.
Who Are the Regulators?
Instead of creating a new authority, VASPA distributes oversight between Kenya’s existing financial regulators:
- Central Bank of Kenya (CBK): Oversees custody services, stablecoins, and digital asset issuance (payment-related functions).
- Capital Markets Authority (CMA): Regulates crypto trading platforms, exchanges, and investment-related virtual asset services.
This split makes logical sense. It mirrors how traditional finance is regulated, with the CBK handling money and the CMA handling markets.
What Activities Does VASPA Cover?
VASPA covers a wide range of virtual asset services, including:
- Running a crypto exchange
- Providing custody or storage of digital assets
- Facilitating the issuance or transfer of virtual assets
- Tokenisation of real-world assets
- Conversion services (crypto-to-fiat and vice versa)
The Act applies to both local and foreign entities serving Kenyan users, a significant provision that means international exchanges accessible to Kenyans must also comply.
READ ALSO :VASP Positions Kenya as Emerging Hub for Regulated Digital Assets
What Does VASPA Require from Businesses?
Licensed VASPs must meet strict standards covering:
- Financial soundness: demonstrating adequate capital
- Governance: clear ownership and management structures
- Cybersecurity: robust protection of user funds and data
- AML/CFT compliance: measures to prevent money laundering, terrorism financing, and proliferation financing, aligned with FATF international standards
As of early 2026, no VASP had yet been formally licensed. The detailed regulations needed to begin the licensing process were still being developed by the National Treasury in consultation with the CBK and CMA. Once published, existing players must apply promptly or cease operations.
What Does This Mean for Kenyan Crypto Users?
More protection. Regulated exchanges must meet minimum standards for security and consumer protection, reducing the risk of platform collapses and fraud.
Clearer tax treatment. The Finance Act 2025 introduced updated provisions for digital asset taxation, running alongside VASPA to create a more complete regulatory picture.
Greater institutional interest. Clear regulation is one of the primary conditions international investors and crypto companies require before entering a market. VASPA signals Kenya is open for serious business.
What Should Crypto Businesses Do Now?
- Audit your operations against the activities covered by VASPA. Are you providing any services that fall within its scope?
- Identify your regulator. Is your activity primarily payment-related (CBK) or market-related (CMA)?
- Begin compliance preparation. AML/CFT frameworks, KYC procedures, and governance documentation should be in place before licensing windows open.
- Watch for subsidiary regulations. The full licensing framework will only crystallise once the National Treasury publishes detailed regulations.
VASPA is Kenya’s boldest step yet toward making digital finance work for everyone, with proper oversight, consumer protection, and integration into the global financial system.
Whether you’re an investor, developer, or operator, understanding this law is now essential.
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