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New rule caps virtual asset providers capital at Sh50m
Kenya was ranked as the world’s fifth-largest market by cryptocurrency transaction volumes underpinned by stablecoins, a type of cryptocurrency that is convertible into fiat currency on a 1:1 basis.
Providers of virtual assets such as cryptocurrencies will be required to maintain up to Sh50 million in paid up capital, as part of their licensing requirement as the government moves to legislate the buying and selling of digital assets in the country.
The capital requirements which also include reserves are to build safeguards for investors engaged in the trading of the assets.
Proposed capital, shareholding and liquidity requirements seen by this publication shows that wallet providers and virtual asset exchanges will have the steepest requirement alongside issuers of stablecoins.
This includes Sh50 million each as paid up capital, Sh50 million in shareholders’ funds and Sh10 million in liquid capital.
Payment processors, brokers, investment advisers, asset managers, offerors of initial coin offer, and tokenisation (digital representation of an asset) have lower capital thresholds of between Sh2.5 and Sh30 million for total paid up capital.
All licensees are however obligated to have insurance coverage to cushion client assets.
“A licensee shall hold and maintain insurance coverage including professional indemnity coverage of not less than Sh500,000 and such other insurance policy allowing for the necessary protection and coverage of client’s assets,” the regulations read in part.
“The insurance coverage shall be commensurate with the level of risks and the scale of proposed virtual asset service provider business.”
The Capital Markets Authority (CMA) and the Central Bank of Kenya (CBK) who are set to serve as the designated regulators for the industry are expected to determine whether licensees hold adequate capital.
The authorities are also allowed to raise the base of capital as they deem necessary. Providers are also obligated to keep reserve assets in Kenya, maintaining the cover at levels equivalent to liabilities owed to clients.
“A licensee shall, at all times, maintain reserve assets or monies equivalent to one hundred percent of the liabilities owed to the client's asset being held by the licensee,” the regulations add.
The Virtual Asset Service Providers regulations follow the recent legislation of the Virtual Assets Providers Act which established a legal framework to license and regulate the activities of service providers in the industry and connected purposes.
Both pieces of legislation follow the drafting of a national policy on virtual assets by a multi-agency taskforce composed of CBK, CMA and other regulators as a response to the proliferation in use of virtual assets in recent years.
Kenya was ranked as the world’s fifth-largest market by cryptocurrency transaction volumes underpinned by stablecoins, a type of cryptocurrency that is convertible into fiat currency on a 1:1 basis.
The country only ranked behind Ukraine, the United States, Nigeria and Vietnam in transactional crypto use according to the 2025 World Crypto Rankings report by global cryptocurrency exchange Bybit.
The report noted that the Kenyan market has demonstrated its readiness to adopt cryptocurrencies, especially in retail transactions.
“This activity points to a population that is already comfortable moving value on-chain, a key prerequisite for scaling crypto payroll."
All crypto service providers including platforms must be licensed and meet anti-money laundering, consumer protection and operational security standards.
