On 4 April 2025, the Virtual Asset Service Providers Bill, 2025 (the Updated Bill) was officially tabled before Parliament. The Updated Bill underwent its First Reading on 8 April 2025. This marks the formal commencement of the legislative process aimed at regulating Kenya’s virtual asset ecosystem.
The Updated Bill is an iteration of the draft version released in January 2025 (the Previous Bill). Please see our review of the Previous Bill here. While the provisions in the Updated Bill remain largely the same, there are some notable changes. Below are the key highlights:
- Scope of regulation: The Updated Bill has expanded the categories of regulated activities to include:
- Stablecoin issuance
- Provision of tokenisation platforms for issuance and secondary trading of tokens
- Transfer and conversion services of virtual assets
- Trading, clearing, and settlement platforms
Notably, escrow services have been excluded from the list of regulated activities. Additionally, the Updated Bill grants the Cabinet Secretary the authority to amend the list of regulated activities, allowing for flexibility to adapt to changes in the virtual asset landscape.
- Transitional provisions: The Updated Bill requires Virtual Asset Service Providers (VASPs) to comply with its provisions within one year. Unlike the Previous Bill, the Updated Bill does not permit the continuation of business activities until a licence application is granted or refused. This creates uncertainty for business continuity, as obtaining a licence may take longer than a year.
- Anti-Money Laundering provisions: The Updated Bill amends the Proceeds of Crime and Anti-Money Laundering Act (Cap 59A) by including VASPs as reporting institutions. The Updated Bill also excludes the proliferation of financing from the anti-money laundering and counterterrorism provisions.
- Amendments to existing laws: The Updated Bill amends the Capital Markets Act (Cap 485A) by including “virtual assets” in the definition of securities and empowering the Capital Markets Authority to regulate VASPs. It also amends the Central Bank of Kenya Act (Cap 491) to empower the Central Bank of Kenya to license and supervise VASPs. The taxation of virtual assets will be addressed separately under the Finance Bill, 2025.
What’s next?
With the Bill now tabled, it will proceed through the standard legislative cycle. Members of the public are invited to submit memoranda on the Bill by the deadline of 25 April 2025 through the Clerk of the National Assembly, after which the Committee on Finance and National Planning will present its final report to Parliament before the Second Reading of the Updated Bill.
Strategic insight
This Bill represents a watershed moment for virtual assets in Kenya. While it offers legitimacy and investor confidence, it also places significant obligations on VASPs. Companies looking to scale responsibly in this space should start adapting their operations to meet the forthcoming regulatory expectations.
