When Kenya’s Virtual Asset Service Providers (VASP) Bill finally landed on the policy table, it didn’t emerge from thin air. It was the result of a decade of tension, negotiation, false starts and stubborn optimism from a small group of builders who refused to let the country fall behind in the digital economy. Yesterday’s X Space felt like a reunion of people who had lived through every chapter of that story. It was equal parts reflection and a quiet warning: the real work begins now.
How Kenya Found Its Way Here
Kenya’s relationship with digital assets has never been simple.
In 2015, the Central Bank of Kenya (CBK) issued a cautionary notice against cryptocurrencies. Banks responded by shutting down crypto-linked accounts, and M-Pesa blocked API access for services like BitPesa. The ecosystem survived, but it survived underground.
By 2016/2017, a different kind of momentum began.
Michael Kimani, alongside Roselyne Gichuru, Paul Gachora and Muthoni Njogu, created the Blockchain Association of Kenya (BAK). Their work didn’t make headlines, but it did something more important: it introduced policymakers to an industry they barely understood. Kenya finally had a delegation that could speak the language of regulators.
Fast-forward to 2023, when the government introduced a 3% Digital Asset Tax (DAT) on every crypto transaction. The tax was controversial, but it forced an unexpected outcome. The industry reorganised, educated users, rallied small businesses and finally built the muscle to challenge poor policy.
This same year, the Worldcoin saga erupted. The Office of the Data Protection Commissioner (ODPC) stirred into action after the project’s iris-scanning activities appeared to outstrip the scope of its licence. A parliamentary inquiry followed. Suddenly, digital policy was no longer abstract.
The momentum continued into September 2023, when the Digital Assets Policy Safari hosted presentations to the National Assembly’s Finance Committee led by Kimani Kuria. The first version of the VASP bill was born there.
Then came 2024, a year of nonstop engagement.
Tax reforms, licensing debates and regulatory design were hammered out with everyone from the Kenya Revenue Authority’s Nixon Omondi to private-sector operators like Busha and Swypt.
By 2025, something rare happened in Kenya: ecosystem actors, legislators, global exchanges, lawyers, startups and civil servants were on the same table working toward one coherent direction. Workshops were held. Parliament listened. CMA issued its stance. The National Assembly responded. Policies began shifting toward enabling the industry.
And something subtle but powerful happened in the region: other African countries started copying Kenya’s direction. Even at the Uganda Blockchain Summit, their finance minister openly stated that Kenya’s progress should guide theirs.
Whether Kenya wanted it or not, it had become the policy blueprint for East and Central Africa.
Two Big Wins Before the VASP Bill
The lobbying machine scored two important victories:
- The rollback of the 3% Digital Asset Tax, which was widely viewed as unworkable and anti-innovation.
- A VASP framework that supports both local innovators and Pan-African companies looking to set up shop in Kenya.
These weren’t accidents. They were the consequences of months of research, negotiation, drafts, revisions and countless dead-end meetings. The Space reminded everyone listening that these wins came from sheer persistence. Long nights, endless submissions, rebuilding trust with regulators, and proving again and again that crypto users were not adversaries, but citizens looking for clarity.
A Brief Reality Check: Crypto Never Wanted Regulators
A point that surfaced repeatedly: crypto was built on avoiding centralised control. Yet once people’s savings, salaries and businesses began depending on digital assets, “no regulation” is simply not an option anymore.
Kenya learned this painfully early:
- When BitPesa’s M-Pesa integration was shut down.
- When banks froze accounts without recourse.
- When the 2018 Kenicoin ICO misled investors and CMA had to intervene.
If the industry wanted protection from arbitrary shutdowns, it needed a legal foundation. Regulation became the bridge.
The Real Intent of the VASP Bill
During the Space, panelists broke down what the bill needed to accomplish:
- Remove the outdated CBK cautionary notice, which has been weaponised against crypto businesses since 2015.
- Create a framework that allows legitimate fundraising, including token issuance for real projects.
- Protect users through clear AML and CTF standards.
From the regulator’s viewpoint, the bill served an urgent purpose. Kenya had been flagged by global anti-money-laundering bodies. Clear VA rules were a requirement if the country wanted to get off that list and maintain its international financial standing.
How Success Will Be Measured
The panel didn’t dwell on theory. They focused on KPIs—what will show that the bill is actually working:
1. Strong licensing uptake
South Africa received more than 300 licence applications after its regulatory framework went live. Numbers tell the truth: people sign up when rules make sense.
2. Fast approval timelines
South Africa cut its licensing turnaround from 18 months to 6.
Kenya’s legacy payment systems sometimes took up to 3 years to get licensed. That cannot happen again.
3. Fair and efficient dispute resolution
If regulators reject a licence unfairly, a business should have a clear path to appeal without sinking under legal costs.
4. Reciprocity across borders
If a startup earns a Kenyan licence, how easily can they operate in Uganda, Rwanda or Tanzania? Harmonised compliance reduces costs and encourages expansion. A PSP model already exists between Kenya and Uganda; crypto should follow the same logic.
5. Strong coordination between CMA and CBK
The worst scenario is when two regulators contradict each other. A successful VASP framework demands alignment, not turf wars.
Where the Conversation Goes Next
The Space closed with a reminder that regulation is not the final destination. Kenya still needs:
- capital requirements that make sense for small and large players
- a tiered, risk-based licensing model
- solvency rules
- clear consumer-protection pathways
- compliance frameworks that don’t choke innovation
And from the trader’s perspective, the biggest question remains: before full regulation kicks in, how do platforms guarantee safety when things go wrong?
That discussion continues in the next Space.
If you want to dive deeper into the full discussion, the X Space recording captures the entire conversation, Listen in about regulatory gaps, startup concerns, trader protection, licensing expectations and the broader regional ripple effects of Kenya’s policy direction.
What Comes After the Bill
Kenya now has the outlines of a digital-asset future that could set the pace for Africa. But regulation alone doesn’t create an ecosystem. Builders do. Startups do. Researchers do. Users do.
Swypt, for example, entered Kenya in 2023. Right in the middle of the Digital Asset Tax storm.
Yet kept growing. Their story, and the stories of other early entrants, will shape how foreign companies evaluate Kenya’s readiness in 2025 and beyond. That will be explored in a separate article.
For now, the bill gives Kenya something it has lacked for nearly a decade:
the permission to innovate without fear.
And that is a powerful starting point.
