Kenya’s Crypto Law Is Here:Reading The Fine Print & Why We’ve Got To Shape Its Implementation
Yesterday was something else. Bad news hits me harder than it oughts to.
On a better note, the Kenyan crypto community celebrated a landmark victory. The presidential assent to the Virtual Asset Service Providers (VASP) Act of 2025 transformed our industry from a grey market into a regulated ecosystem.
I’ve read the fine print & there’s a still a long way to go.
The VASP Bill
A law is defined not just by what it includes, but by what it leaves out.
It’s a monumental step forward. The Act defines who qualifies as a Virtual Asset Service Provider. From exchanges and wallet providers to token issuers and custodians. It mandates registration with the Capital Markets Authority (CMA) and compliance with stringent anti-money laundering (AML) and know-your-customer (KYC) protocols.Exactly the foundation we needed. But regulation without flexibility can turn innovation into paperwork.
Read more about it here.
Does the bill cater for the little guys?
We’re missing a regulatory sandbox!.
A sandbox is a controlled environment where startups can test new, disruptive technologies with real users under regulatory supervision, but without the crippling cost of full-scale licensing.
This is one of the most crucial tools for fostering innovation. In countries like Mauritius and Nigeria, sandboxes have birthed startups that scaled into fully licensed fintechs without being crushed by compliance costs. Kenya pioneered this approach in traditional fintech, why abandon it now in crypto?
Furthermore, the law lacks tiered licensing. It risks treating a three-person startup building a niche DeFi protocol with the same heavy hand as a multi-national exchange. This one-size-fits-all approach could stifle the very grassroots builders need.
A tiered licensing model, like what Singapore and the UK use, allows startups to scale regulatory obligations as they grow. Early-stage projects focus on transparency and security, while larger institutions face stricter capital and custody requirements. It’s fair, scalable, and innovation-friendly
Also, there’s a rumor on Binance’s role in regional crypto regulation. With the new Act in Kenya, some people are asking questions. The Virtual Asset Chamber (VAC), reportedly funded by Binance-linked entities, played a role in consultations. This overlap raises questions about neutrality. Does our regulatory framework truly reflects Kenyan innovation priorities or global corporate interests? Rumor tumor
A Domestic Law in a Borderless World
Cryptocurrency is, by its nature, global. Capital flows, talent moves, and protocols operate across borders. Yet, the VASP Act is almost entirely domestic in its focus.
There is no mention of interoperability with continental frameworks like the African Continental Free Trade Area (AfCFTA) or global standards like the EU’s Markets in Crypto-Assets (MiCA) regulation.
This creates a silo. A Kenyan VASP, fully compliant at home, may find itself hitting a wall of regulatory friction when trying to expand into Uganda, Nigeria, or Europe. It isolates our ecosystem, potentially deterring the foreign investment and partnerships we need to scale. For Kenya to become a true crypto hub, our laws must speak the same language as the rest of the world.
The Other Bills Were Insane
The VASP Act was passed alongside the highly controversial Computer Misuse and Cybercrimes (Amendment) Bill.
The Cyber Crimes Act is a tool for silencing dissent and monitoring citizens. Crytpto is rooted in principles of privacy, decentralization, and freedom from undue oversight. When a constructive financial law is passed in the same breath as a potentially repressive one, we’ve got a problem.
This Act is not about safety, it’s about silencing the truth. It silences the voiced that could expose corruption and question power.
What Now?
Laws don’t build ecosystems; people do. The VASP Act gave us structure; now we must give it spirit. If we want Kenya to lead Africa’s digital economy, we can’t stop at compliance. We have to demand creativity, transparency, and freedom.
The ink has dried, but the story has just begun.
