Crypto companies operating in Kenya will have to set up offices in the country and appoint locals to lead their subsidiaries if the new rules proposed by the National Treasury get lawmakers’ nod.
The draft Virtual Asset Service Providers Bill, 2025 published by the National Treasury stipulates the conditions before the firms can secure a licence from the regulators.
“A virtual asset service provider shall maintain a registered office in Kenya,” read the proposed rules meant to protect customers and the country’s financial reputation and ensure stability.
Added to the requirement to have a physical office, the companies will need to appoint a chief executive officer to run their operations in Kenya, adding to their burden of compliance with the regulations.
“A virtual asset service provider shall appoint or designate a person as a chief executive officer, who shall be responsible for the day-to-day management of the virtual asset service provider in Kenya,” reads the rules.
The CEO to be appointed must be approved by the relevant regulatory authority –either be the Central Bank of Kenya (CBK) or the Capital Markets Authority (CMA)– which has also been empowered to prescribe the eligibility criteria for the holders of that office.
This requirement is akin to the regulatory standards of the banking and capital markets sectors, in which top officials and directors must be approved by the respective regulators.
However, it is a deviation from the regulation of businesses that operate entirely online, which have not been forced to have a physical presence in the country or appoint a senior official to lead local operations.
Majority of crypto companies, including exchanges, brokers, wallet service providers, advisories, and payment processors currently don’t have offices in Kenya or local CEOs.
Many countries in Africa, including South Africa and Mauritius, that have enacted crypto regulations so far, also have a similar requirement for local presence of crypto companies.
Currently, Kenya does not require businesses in the digital marketplace to have physical presence, but subjects their products to a Significant Economic Presence tax.
The tax is charged at an effective rate of three percent of gross turnover. The law affects companies such as Netflix, Spotify, Amazon, Uber, among others.
The government has however stepped up efforts to have foreign tech companies with operations in Kenya to have a physical presence in the country.
Last year, the Competition Authority of Kenya (CAK) ordered food delivery firms Glovo and Uber Eats to establish a physical presence in Kenya to better respond to consumer needs.
Last week, the government also issued a directive for social media companies to establish a physical presence in the country in efforts to tame ‘misuse’ of the platforms.
