Professional services firm PwC offers tax advice to Kenyan cryptocurrency companies in regards to lobbying.
In a significant stride towards digital innovation, Kenya is actively advancing comprehensive cryptocurrency regulation. The proposed Virtual Asset Service Providers (VASP) Bill, introduced in April 2025, aims to establish a multi-agency regulatory framework, positioning Kenya as a potential leading crypto hub in Africa.
The framework involves five key government bodies: the Central Bank of Kenya (CBK), Capital Markets Authority (CMA), Competition Authority of Kenya, Communications Authority of Kenya, and the Office of the Data Protection Commissioner. These agencies will license and supervise all crypto operations, fostering financial transparency and promoting innovation.
Stablecoins, such as USDC and a closed-loop version called USDB, will be regulated specifically by the Central Bank of Kenya. Initial Coin Offerings (ICOs) and token issuance platforms for real assets fall under the Capital Markets Authority's oversight. Licensees must maintain not only a registered address but also a physical office in Kenya to enable on-site inspections and enforcement of anti-money laundering/combating financing of terrorism (AML/CFT) regulations.
Digital assets are formally recognized as payment instruments, emphasizing regulatory support for their use in everyday transactions. In a move to encourage greater crypto adoption, Kenya’s Parliament has repealed the previously imposed 3% digital assets transaction tax. Instead, the government introduced a lower excise duty on digital assets, striking a balance between generating revenue and fostering innovation within the sector.
Local crypto companies and stakeholders have actively engaged with the regulatory process, advocating for cooperative, transparent policies that support innovation while ensuring consumer protection. They have also pushed for adjustments to fines and penalties, with fines for cryptocurrency companies reduced from initially proposed high levels.
In summary, Kenya is moving towards a robust, multi-agency regulatory ecosystem that emphasizes licensing, compliance, and innovation support for digital assets, paired with a more favorable tax regime to boost cryptocurrency adoption and integrate crypto into the national payment system. This progressive approach is expected to foster financial transparency, encourage innovation, and position Kenya as a leading crypto hub in Africa.
Meanwhile, in neighbouring Nigeria, regulatory alignment and clarity remain elusive, with banks freezing accounts, arrests continuing, and uncertainty persisting over what's actually changed despite the 2025 Securities Act. Nigeria, despite high adoption, is still playing catch-up in terms of regulatory alignment compared to countries like South Africa, which licensed 248 firms under clear rules on compliance by 2024.
Elsewhere, Stripe recently introduced stablecoin-powered financial accounts to businesses in over 100 countries, but Africa's four biggest economies (Egypt, Kenya, Nigeria, and South Africa) did not make the list. Accounts denominated in USD, EUR, or USDC are available, with payouts only available in USD and made via bank or crypto wallet transfers.
The coalition of Kenyan cryptocurrency companies, including Busha, Kotani Pay, Luno, Swypt, HoneyCoin, DurraFx, and PwC Kenya as an advisor, has formally submitted a proposal to Parliament, calling for significant changes to the taxation of digital assets. They aim to recognize crypto platforms as financial institutions to avoid double taxation under VAT and excise laws and to classify digital assets as property, taxed under capital gains rules, just like real estate or stocks.
As regulators navigate these complex issues, it is crucial that they align and send consistent signals, and there needs to be regular dialogue between the crypto community and regulators, as seen in Kenya's policy engagement efforts. The future of cryptocurrency regulation in Africa is promising, with Kenya leading the charge towards a more transparent and innovative digital asset landscape.
- The proposed Virtual Asset Service Providers (VASP) Bill, introduced in Kenya in April 2025, aims to create a multi-agency regulatory framework for cryptocurrency, positioning Kenya as a potential leading crypto hub in Africa.
- Five key government bodies in Kenya will license and supervise all crypto operations, including the Central Bank of Kenya, Capital Markets Authority, Competition Authority of Kenya, Communications Authority of Kenya, and the Office of the Data Protection Commissioner.
- Stablecoins like USDC and a closed-loop version called USDB will be regulated specifically by the Central Bank of Kenya, while Initial Coin Offerings (ICOs) and token issuance platforms for real assets fall under the Capital Markets Authority's oversight.
- Digital assets are recognized as payment instruments in Kenya, and the government has repealed the previously imposed 3% digital assets transaction tax, replacing it with a lower excise duty.
- Local crypto companies and stakeholders in Kenya have advocated for cooperative, transparent policies that support innovation while ensuring consumer protection and have pushed for adjustments to fines and penalties.
- Kenya is moving towards a robust, multi-agency regulatory ecosystem that emphasizes licensing, compliance, and innovation support for digital assets, paired with a more favorable tax regime to boost cryptocurrency adoption.
- In contrast, regulatory alignment and clarity remain elusive in Nigeria, with banks freezing accounts, arrests continuing, and uncertainty persisting despite the 2025 Securities Act.
- Kenyan cryptocurrency companies have submitted a proposal to Parliament, calling for changes to the taxation of digital assets, aiming to recognize crypto platforms as financial institutions to avoid double taxation and classify digital assets as property, taxed under capital gains rules.
