Stablecoin issuer / redeemer in Kenya
Issues a fiat-pegged stablecoin to the public, operates redemption, and holds reserves backing the float.
Stablecoin issuer is conditionally permitted in Kenya with a local entity, subject to AML obligations and high licensing burden.
Verdict Details
- Permitted
- conditional
- Local entity required
- Yes
- Licensing burden
- High
- Last updated
- 2026-07-13
AML Obligations
- Register as a Virtual Asset Service Provider (VASP) under the VASP Act, 2025 and Draft VASP Regulations, 2026
- Conduct Customer Due Diligence (CDD): verify customer identities, maintain UBO records, apply enhanced due diligence for high-risk cross-border VA activities
- Report suspicious transactions (STRs) to the Financial Reporting Centre (FRC) promptly
- Retain transaction records, customer data, and verification documents for at least 7 years (per POCAMLA standards)
- Undergo ongoing compliance monitoring with regular reports, audits, and adherence to CMA/CBK requirements
- License fees ranging from KES 100,000 (~$772) to KES 2 million (~$15,400)
Key Restrictions
- Must hold minimum paid-up capital of KES 500 million (~$3.85 million)
- Must maintain core or liquid capital of KES 100 million (~$773,700) or 100% of current liabilities for at least 30 days (whichever is higher)
- Reserves must be fully backed by liquid assets (real cash or near-cash/low-risk assets), held onshore, segregated, and accessible at all times
- Reserves must be ring-fenced for holder claims in case of issuer issues — must support redemption
- Issuers must disclose reserve composition and undergo periodic audits
- Draft regulations reportedly require 30% of customer funds to be held in Kenyan banks for stablecoins
- Must maintain a physical office in Kenya
- Must obtain VASP licensing approval including evaluation of financial health, governance, operational transparency, and capital requirements
Key Risks
- Regulatory framework is still evolving — VASP Act 2025 is enacted but draft regulations are not yet finalized (public participation completed April 2026)
- Multiple regulators (CBK, CMA, FRC) create coordination risk and potential for conflicting requirements
- CBK has historically issued warnings against virtual currencies in formal banking — potential pushback on fiat-stablecoin integration
- Reserve onshoring and segregation requirements create operational complexity and FX/custody risk for foreign issuers
- High minimum capital (KES 500M) may be prohibitive for smaller entrants
- Tax treatment by KRA on stablecoin issuance/redemption is not yet fully clarified in the provided facts
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
A person issuing stablecoin in or from Kenya must be licensed by the Central Bank of Kenya, which the First Schedule to the Virtual Asset Service Providers Act, 2025 makes the regulatory authority for stablecoin issuance; regulation 4 of Legal Notice No. 134 of 2026 applies the Regulations to any person who actively solicits or targets Kenyan consumers, and regulation 70 forbids offering a stablecoin to the public without a licence, issuer status and Central Bank approval of the published white paper.
The KES 500 million minimum paid-up capital for stablecoin issuers appeared only in the March 2026 draft Virtual Asset Service Providers Regulations; the figure carried into Legal Notice No. 134 of 2026 on 22 July 2026 is KES 300 million, set in the Fifth Schedule under Part IX of those Regulations.
The gazetted Virtual Asset Service Providers Regulations, 2026 require a stablecoin issuer to hold minimum liquid capital of KES 60 million or 100 per cent of current liabilities for at least thirty days, whichever is higher; the KES 100 million figure belongs to the superseded March 2026 draft.
Fees under the Virtual Asset Service Providers Regulations, 2026 are set in the First Schedule and payable under regulation 5; the gazetted virtual asset exchange licence fee is KES 1 million with a KES 100,000 application fee and the virtual asset investment adviser pays KES 50,000 with a KES 10,000 application fee, the KES 2 million exchange figure having appeared only in the March 2026 draft.
Ongoing monitoring requires regular reports, audits, and compliance standards.
Kenya's Virtual Asset Service Providers Regulations, 2026 require the value of a stablecoin issuer's reserve assets to be at all times at least equal to the nominal value of all outstanding units, restrict reserve composition to cash, government securities with residual maturity of ninety days or less and repurchase agreements of seven days or less, and require the reserve assets to be held in custody by a custodian approved by the Central Bank of Kenya; at least 30 per cent of funds received must be held in segregated accounts at commercial banks in Kenya.
Regulation 68(1)(h) to (j) of Legal Notice No. 134 of 2026 requires a stablecoin white paper to disclose the method and all factors used to calculate the value of reserve assets, their initial value and composition, and the conditions and procedure to purchase and redeem stablecoins against reserve assets, and regulation 69(2)(c) requires the issuer to publish any event likely to have a significant impact on the value of the stablecoin or of the reserve assets.
Regulation 71 of Legal Notice No. 134 of 2026 gives a stablecoin holder a claim against the issuer, requires issuance at par value on receipt of funds and requires the issuer to effect any redemption request within two working days at par value by paying the monetary value of the stablecoin to the holder, while regulation 72 forbids the issuer or any licensee from granting interest to stablecoin holders.
Virtual asset service providers licensed in Kenya must perform customer due diligence before onboarding a client under regulation 32 of the Virtual Asset Service Providers Regulations, 2026, carried out in accordance with the Proceeds of Crime and Anti-Money Laundering Act, and the Second Schedule to the Virtual Asset Service Providers Act, 2025 makes every virtual asset service provider a reporting institution under that Act.
The Second Schedule to Kenya's Virtual Asset Service Providers Act, 2025 amends the Proceeds of Crime and Anti-Money Laundering Act so that the definition of reporting institution expressly includes a virtual asset service provider, which places Kenyan virtual asset service providers under the suspicious transaction reporting duty owed to the Financial Reporting Centre with effect from the Act's commencement on 4 November 2025.
Kenyan virtual asset service providers must keep a record of both client and own transactions for not less than seven years from the date of the transaction under section 44(2) of the Virtual Asset Service Providers Act, 2025, repeated at regulations 22(1)(b) and 26(3) of Legal Notice No. 134 of 2026, and must give the regulator online read-only real-time access to those records under section 44(1).
Kenya's financial intelligence unit is the Financial Reporting Centre, established under the Proceeds of Crime and Anti-Money Laundering Act, which receives and analyses suspicious transaction reports; AML/CFT/CPF supervision and enforcement for virtual asset service providers is carried out by the Central Bank of Kenya and the Capital Markets Authority under section 32 of the Virtual Asset Service Providers Act, 2025.
The Capital Markets Authority licenses and supervises virtual asset exchanges, virtual asset brokers, virtual asset investment advisers, virtual asset managers, virtual asset offering providers conducting initial coin offerings, tokenisation providers and token issuance platforms under the First Schedule to the Virtual Asset Service Providers Act, 2025, and section 11(3)(fb) of the Capital Markets Act now requires it to regulate virtual asset service providers.
The Central Bank of Kenya licenses virtual asset wallet providers, virtual asset payment processors and stablecoin issuance under the First Schedule to the Virtual Asset Service Providers Act, 2025, and section 4A(1)(dc) of the Central Bank of Kenya Act now empowers it to license and supervise virtual asset service providers; virtual asset exchanges are licensed by the Capital Markets Authority and fall outside the Central Bank's perimeter.
Virtual Asset Service Providers Bill 2025: https://www.afriwise.com/blog/kenya-now-has-a-crypto-law-virtual-asset-service-providers-vasp-bill-2025
Draft National Policy on VAs and VASPs: https://newsite.treasury.go.ke/sites/default/files/Notices/DRAFT-NATIONAL-POLICY-ON-VAs-AND-VASPs.pdf
The Capital Markets Authority licenses virtual asset exchanges, brokers, investment advisers, managers, initial-coin-offering providers, tokenisation providers and token issuance platforms under the First Schedule to the Virtual Asset Service Providers Act, 2025; the implementing rules stopped being drafts on 22 July 2026, when the Virtual Asset Service Providers Regulations, 2026 were gazetted as Legal Notice No. 134 of 2026 in Kenya Gazette Supplement No. 185.
The Central Bank of Kenya licenses virtual asset wallet providers, virtual asset payment processors and stablecoin issuance under the First Schedule to the Virtual Asset Service Providers Act, 2025, and section 4A(1)(dc) of the Central Bank of Kenya Act now empowers it to license and supervise virtual asset service providers; virtual asset exchanges are licensed by the Capital Markets Authority and fall outside the Central Bank's perimeter.
The Cabinet Secretary responsible for the National Treasury makes regulations under section 49 of the Virtual Asset Service Providers Act, 2025 and may designate further regulatory authorities under section 5(c); the National Treasury published the draft Virtual Asset Service Providers Regulations, 2026 with a Regulatory Impact Statement for comment by 10 April 2026, and the Act itself creates no technical working group and names no chair.
Kenya's 3 per cent digital asset tax under section 12F of the Income Tax Act, introduced by section 10 of the Finance Act 2023 from 1 September 2023, was repealed and replaced from 1 July 2025 by excise duty at 10 per cent of the excisable value of fees charged on virtual asset transactions, which the provider collects and remits to the Commissioner on or before the twentieth day of the following month; the Virtual Asset Service Providers Act, 2025 made no tax amendment.
Coordination involves a committee including National Intelligence Service and National Counterterrorism Center for oversight.
Kenya's Virtual Asset Service Providers Act, 2025 is Act No. 20 of 2025; it received presidential assent on 15 October 2025, was published in Kenya Gazette Supplement No. 173 (Acts No. 20) on 21 October 2025 and commenced on 4 November 2025, and its implementing regulations were gazetted as Legal Notice No. 134 of 2026 on 22 July 2026.
The Virtual Asset Service Providers Regulations, 2026 stopped being a draft on 22 July 2026, when they were gazetted as Legal Notice No. 134 of 2026 in Kenya Gazette Supplement No. 185; they run to 151 regulations in fifteen parts and six schedules and impose licensing, capital, AML/CFT/CPF, cybersecurity, custody, market-conduct and stablecoin reserve duties that are now in force.
Verdict Attribution
- Source:
- AI-Generated · Unreviewed
- AI synthesized:
- 2026-07-13 (deepseek-chat)
- Last updated:
- 2026-07-13
- Confidence:
- medium
This verdict was produced by an AI model from the underlying facts. Confirm with counsel before relying on it for material decisions.
Conditional — stablecoin issuers "in or from Kenya" must register as VASPs under the VASP Act 2025, maintain KES 500M minimum capital, hold fully-backed segregated onshore reserves, comply with AML/CFT obligations under FRC supervision, and meet CMA/CBK licensing requirements; the framework is enacted but draft regulations are not yet finalized, creating some residual ambiguity.
Questions this verdict aims to answer
- What e-money or banking license is required to issue?
- What reserve composition, segregation, and audit rules apply?
- What redemption rights must be granted to holders?
- Are foreign-issued stablecoins permitted for use locally?