Five regulatory agencies will jointly oversight virtual asset service providers (VASPs) in Kenya if fresh recommendations by the National Assembly’s Finance Committee are approved by the full House.
The committee has endorsed a proposal by social enterprise organisation, Credence Africa to accommodate a cross-sectoral regulatory unit that will cover areas in which VASPs operate, including market conduct, data protection, and digital communications infrastructure.
“The committee agreed with the proposal by the stakeholder (Credence Africa),” the finance committee said in its report following collection of public views. With this, the joint regulator would draw membership from the Central Bank of Kenya, Capital Markets Authority, the Competition Authority of Kenya, Communications Authority of Kenya and the Office of the Data Protection Commissioner.
The new regulator would also comprise members from ‘any other body designated as such by the Cabinet secretary by notice in the gazette.’ Digital assets cover anything of value that is not tangible, including cryptocurrencies, token codes, or a number held in digital form and generated through cryptographic means and providing a digital representation of value exchanged.
The committee has also adopted a recommendation by the Virtual Assets Chamber (VAC) to delete a clause in the Bill that grants the regulatory authority the mandate to conduct offsite surveillance. VAC had noted that this provision was overly prescriptive with no clear definition or boundaries on what offsite surveillance involves.
The Virtual Asset Service Providers Bill, 2025, tabled in Parliament on April, 4 this year, has received backing from crypto firms who have been unable to access banking services for the past decade due to an existing CBK cautionary notice.
Former CBK governor Patrick Njoroge, in an advisory to Kenyans, said cryptocurrencies posed risks to financial stability but they could be used to plug gaps such as expanding financial inclusion as well as cutting transaction costs.
The Bill now requires every virtual assets service provider to open and operate a bank account in the country.
Once passed, Kenya will be the third country after Nigeria and South Africa to have a law that governs cryptocurrencies in Africa.
A 2022 report by the United Nations showed that Kenya has the largest share of its population adopting cryptocurrencies in Africa, noting that 8.5 per cent of residents, or 4.25 million people own the virtual currencies in the country.
This placed Kenya ahead of developed economies such as the US which ranked sixth with 8.3 per cent of its population owning digital currencies.
