Kenya Drafts Sweeping Crypto Rules With 0.5% Offering Fee
Kenya's National Treasury has released its draft Virtual Asset Service Providers (VASP) Regulations 2026, introducing a strict regulatory framework for the country's crypto industry. Published for public comment on March 17, the regulations are issued under the authority of the Virtual Asset Service Providers Act, 2025. The stated objectives are to enhance consumer protection, combat financial crime, and provide legal clarity for a sector estimated to involve Ksh155 trillion ($1.2 trillion) in virtual assets held by Kenyans.
The new rules introduce significant costs for market participants. A transaction fee of 0.05% is proposed for token issuance platforms, payable by each party to a trade. Furthermore, entities seeking to launch virtual asset offerings must pay a fee equivalent to 0.5% of the total value of a successful offering, a move that could reshape the economics of fundraising for new crypto projects in the region.
Stablecoins Face Strict 30% Local Reserve Mandate
The regulations impose stringent requirements on stablecoin issuers to safeguard customer funds and ensure financial stability. A core provision mandates that at least 30% of customer funds be held in segregated accounts at commercial banks within Kenya. This measure is designed to anchor stablecoin operations within the local banking system and provide regulators with greater oversight.
Beyond the local bank requirement, the remaining reserves must be invested in low-risk, highly liquid assets. The draft specifies acceptable instruments as cash, central bank deposits, short-term government securities with a maturity of 90 days or less, and repurchase agreements with a maturity not exceeding seven days. These rules aim to minimize market, credit, and concentration risks, aligning Kenya with emerging global standards for stablecoin management.
New Rules Target Operational Conduct and Market Entry
To operate legally, the draft regulations require VASPs to be incorporated in Kenya and maintain a physical office in the country. Foreign companies seeking to enter the market must first secure a compliance certificate before they can apply for a license. Additionally, all company directors and senior officers will be subject to background and competence assessments by regulators.
The framework also explicitly bans high-risk activities, including any transaction designed to conceal the identities of the participants. By setting these operational guardrails, Kenya's government aims to formalize the industry, attract institutional investment by providing clear safety measures, and set a potential regulatory precedent for other nations across the African continent. The public consultation period for the draft rules is expected to run through April.
