Kenya -- Stablecoin Regulations Regulatory Overview

Kenya's regulatory framework for stablecoins is primarily governed by the Virtual Asset Service Providers Act 2025 (passed by Parliament) and the National Treasury’s draft Virtual Asset Service Providers Regulations (published in March 2026, open for public comment).[1][2][3][4]

Classification

Stablecoins are treated as a subset of virtual assets under the Virtual Asset Service Providers Act 2025, with specific rules for issuance distinguishing them from other virtual assets like cryptocurrencies or tokenized assets. They are not explicitly classified as e-money, payment tokens, or securities in the available sources, though the framework emphasizes their backing by cash or low-risk assets to function as stable value instruments.[1][2][3][4][5]

Issuer Licensing

• Stablecoin issuers "in or from Kenya" must register as Virtual Asset Service Providers (VASPs) and obtain licensing approval from relevant authorities, including evaluation of financial health, governance, operational transparency, and capital requirements.[2][3][6]
• Minimum paid-up capital: KES 500 million (~$3.85 million).[3][6]
• Core or liquid capital: KES 100 million (~$773,700) or 100% of current liabilities for at least 30 days (whichever is higher).[3]
• License fees range from KES 100,000 ($772) to KES 2 million ($15,400), highest for exchanges.[6]
• Ongoing monitoring requires regular reports, audits, and compliance standards.[2]

Reserve Requirements

• Stablecoins must be fully backed by liquid reserves such as real cash or near-cash/low-risk assets, held onshore, segregated, and accessible at all times to prevent de-pegging.[2][3][4]
• Issuers must disclose reserve composition and undergo periodic audits.[2][3]
• Reserves must support redemption and remain ring-fenced for holder claims in case of issuer issues.[3]

Redemption Rights

Holders have the right to redeem tokens at par value on demand.[3]

Algorithmic Stablecoin Rules

No specific rules for algorithmic stablecoins are mentioned; the framework focuses on fully backed, asset-supported stablecoins, implying algorithmic (unbacked) models may not qualify for licensing.[2][3][4]

Interest or Yield

Issuers are banned from paying interest or yield on stablecoins, including indirect yield through other licensed VASPs.[3]

CBDC Interaction

No direct references to interaction with a Central Bank Digital Currency (CBDC); however, subsidiary regulations from the Central Bank of Kenya (CBK), alongside the National Treasury and Capital Markets Authority (CMA), will address integration with banks and mobile money.[1]

Status and Oversight

The Act is passed, but subsidiary regulations remain in draft (as of April 2026), involving CBK, National Treasury, CMA, Nairobi International Financial Centre (NIFC), and others. Public comments closed recently, with implementation pending to ensure financial stability and consumer protection.[1][2][3][5] Industry volumes (e.g., $500M monthly stablecoin transactions) drive urgency.[1]