The government of Kenya, through the National Treasury and Economic Planning, is set to collect public input on the bill seeking to regulate, enhance, promote, and provide risk management towards the adoption of virtual assets (VAs) and operation by virtual asset service providers (VASPs).
The increasing adoption of blockchain technology and cryptocurrency by many Kenyans has pushed the government towards the development of a legal regulatory framework to govern its activities and expand its use.
The national policy on virtual assets and virtual asset service providers, in its draft format, seeks to:
- Guide the development of a legal framework governing VAs and VASPs.
- Promote a fair and efficient market for VAs and VASPs.
- Ensure sound risk management for VAs and VASPs; and
- Promote financial literacy and innovation on VAs and VASPs.
Virtual assets, which are widely used in payments, investments, and remittances, are not only common in Kenya but currently accessible in almost every country in the world. They are decentralized and come with much risk, from money laundering activities to data privacy to cybersecurity risks.
However, the benefits of blockchain and cryptocurrency to local and international trading are at par due to their financial transparency enhancement, immutability, and the fact that they lack a centralized governing body or issuer.
This risk is said to be critical despite Kenya having put in place an Anti-Money laundering and Counter-Financing of Terrorism legal framework aimed at thwarting illegal financial activities. However, the government says there is no legal framework to govern the VAs and VASPs activities, which are beyond its control at the moment.
“Kenya has witnessed increased adoption of VAs for use in payments, remittances, and investments over the years. VAs present opportunities to promote digital finance, boost e-commerce, facilitate international trade, and even create a new class of digital jobs,” said the National Treasury.
“However, the benefits of VAs have been stemmed by cybersecurity risks, data privacy risks, and frauds and scams in the country. Further, the activities of the VASPs are not limited to Kenya, and therefore, some of the VASPs operating locally are not registered and/or licensed in Kenya, hence posing potential risks related but not limited to ML/TF/PF.”
The risk of adopting virtual assets can be traced back to 2015, when the Central Bank of Kenya issued a Banking Circular cautioning all banks gainst dealing in virtual currencies or engaging in any form of transaction with entities dealing in virtual currencies.
In the same month of December 2025, CBK issued a public notice warning Kenyans against virtual currencies, such as Bitcoin, due to its decentralized nature and inherent risk, which guarantees no protection against its platforms’ breakdown.
Again in July 2023, concerns over data privacy breaches were raised in Kenya following the launch of Worldcoin operations in Kenya, which saw many Kenyans thronging their registration booths to get worldcoin tokens worth Kshs 7,000 in return, when the exchange rate against the dollar was worth it.
Kenyans were receiving 25 coins in exchange for their biometric data, which would then lead to its indefinite suspension in the country, pending investigation and inquiry by the National Assembly committee.
Wordlcoin’s dubbious operations prompted the “National Assembly ad-hoc Committee on the Inquiry into the Activities of Worldcoin in Kenya to recommend, inter alia, for the development of a comprehensive farmwork and policies on VAs/VASPs” in September 2023.
In addition to tapping onto the revenue opportunities that virtual assets and virtual asset service providers come with, the National Treasury introduced a 3% Dital Asset Tax payable by a person on income derived from the transfer or exchange of digital assets.
The documents on VAs and VASPs are on the National Treasury’s website. Participants are required to submit their views to the email address pstnt@treasury.go.ke and copied to vasps@treasury.go.ke on or before January 24, 2025, suing separate templates provided on their website. The National Treasury is also set to conduct a nation-wide public partition forum from 20th to 29th January 2025.
