Kenya’s crypto industry has warned that proposed licensing rules could push startups out of the local market and drive activity toward offshore platforms.
Draft regulations under the Virtual Asset Service Providers framework would require firms to meet significant capital thresholds, including up to $3.86 million for stablecoin issuers.
Industry group the Virtual Asset Association of Kenya said the combined burden of capital, insurance and compliance costs could exclude smaller players and concentrate the market among well-funded firms.
The rules also mandate ring-fencing of client funds and regulatory oversight by the Central Bank of Kenya and the Capital Markets Authority to improve consumer protection.
Kenyan authorities argue that stricter regulations are necessary to manage risks in a fast-growing but largely unregulated sector and to prevent fraud and instability.
The draft regulations follow the passage of the VASP Act in October 2025, with stakeholders given until April 10, 2026, to submit feedback before finalisation.
Industry participants say the outcome will determine whether Kenya can balance innovation with regulation or risk losing crypto activity to more flexible jurisdictions.