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How Kenya’s virtual assets regulation could foster trust
Service providers will only receive a licence after passing “fit and proper” checks, proving good governance, sufficient capital, and operational controls.
As digital assets take centre stage in global finance, Kenya has a historic opportunity to put its legal and regulatory architecture at the forefront of this revolution.
The Virtual Asset Service Providers Bill, undergoing its third reading in Parliament, promises not just to regulate, but to elevate Kenya's virtual assets sector.
If passed, it will safeguard consumers, bring clarity and rigour to service providers, and enable the government to reap significant economic benefits. With this law, Kenya won’t just catch up. It could lead Africa in virtual asset governance.
Today, too many sensible Kenyans are losing money to scams. Users of a crypto platform called CBEX woke up one morning to find their wallets wiped clean.
One person lost about $6,000 in a single day. When they tried to recover the money, the platform demanded a verification fee, effectively running an exit scam.
Imagine someone working hard, trusting the system, and then watching their future fritter away through no fault of their own. And let's not forget the wider scale fraud involving Bitstream Circle, a Ponzi scheme run from abroad that stole over Sh1.1 billion (around $10 million) from Kenyans.
These losses don’t just hurt individuals, they shatter families, restrict opportunity, and erode trust in digital innovation. In 2022 alone, Kenyans lost up to $93 million to digital currency fraud.
These are not anomalies. They are the product of a regulatory vacuum. Virtual assets have thrived in Kenya because there are no clear rules, no licensing, and no consistent oversight. Criminals exploit this gap to peddle lies, with devastating human consequences.
That's where the proposed Bill comes in. By requiring licensing, financial transparency, and strong governance, it will ensure only trustworthy businesses operate. Service providers will only receive a licence after passing “fit and proper” checks, proving good governance, sufficient capital, and operational controls.
All licensed providers must follow anti‑money laundering and counter‑terror financing rules,measures that leave no room for criminal activity.
Regulators will have the power to inspect accounts, revoke licences, and require regular disclosures. Under formal oversight, platforms such as CBEX or Bitstream Circle would not have been able to operate unchecked.
Let’s look to our neighbours. Mauritius took a similar step in 2021, passing a comprehensive law that requires licensing, capital buffers, and cybersecurity measures, all in line with global standards. While its framework had some delays in implementation, it succeeded in reducing illicit activity and boosting investor confidence.
In South Africa, regulators welcomed crypto by defining digital assets as financial products, leading them to licence multiple platforms. That clarity has helped companies grow within a predictable framework . Kenya’s Bill goes a step further. It establishes a purpose‑built legal system tailored specifically for virtual assets, instead of adapting old rules.
Taken together, these elements mark Kenya’s regulatory ambition as advanced. The Bill introduces mandatory licensing, fitness criteria, capital and cybersecurity standards, AML/CFT alignment, and judicially enforceable oversight. It strengthens consumer confidence, boosts provider legitimacy, and delivers economic upside for government revenue and employment.
For service providers, the Bill removes guesswork. They’ll operate with defined licences, clear compliance standards, and systematic oversight. Local startups and international investors will have confidence to expand, create jobs in fintech, cybersecurity, legal support, and customer care. The licensing model isn’t just about regulation—it’s about building a sustainable industry ecosystem.
The national benefits are compelling. Regulated platforms will pay taxes and contribute to forex reserves. Consumers will keep their funds within the financial system rather than fleeing to unregulated apps. And by addressing illicit use, Kenya can maintain a strong international reputation and avoid being grey‑listed, Something other countries have struggled to overcome.
Ultimately, this Bill balances innovation with protection. It encourages growth in blockchain technology, fintech services, and digital finance, while making sure every participant, business or consumer, is accountable.
In Kenya, we have a choice. We can allow another generation of investment victims, like Carol, or the CBEX users—who lose everything in scams. Or we can choose the path of progress: a path where digital innovation is responsibly guided, where consumers know their money is protected, and where businesses thrive under transparency and global standards.
Let us seize this transformative moment. By advancing this Bill, Kenya signals to its citizens, investors, and the world that it values innovation, tempered by responsibility. The future is digital, and Kenya is ready.
The writer is the chairman of Virtual Asset Chamber of Commerce (VACC).
