Crypto Perpetual Futures in Kenya: The Licensing Gap

Crypto perpetual futures are the most traded product in digital assets, and Kenyans can reach them in minutes through offshore apps and on-chain exchanges. Since the Virtual Asset Service Providers Act, 2025 closed its transition period on 4 November 2026, the obvious question is which Kenyan licence covers them. The uncomfortable answer is that none does. This article explains why perps fall between the VASP Act and the Capital Markets Authority’s derivatives rules, and what that means for anyone offering them to Kenyan users.

What a perpetual future is

A perpetual future, or perp, is a contract that tracks the price of an asset such as bitcoin with no expiry date. The trader posts margin, takes a long or short position, often with leverage, and pays or receives a periodic funding rate that keeps the contract price close to the underlying. If losses eat through the margin, the position is liquidated.

Nothing changes hands except collateral and profit or loss. The trader never owns the bitcoin. That point decides how Kenyan law treats the product.

Why perps fall outside the VASP Act

Section 2 of the VASP Act defines a virtual asset as a digital representation of value that can be traded or transferred and used for payment or investment, and expressly excludes digital representations of fiat currencies, securities and other financial assets. A perp is a derivative contract on a price, which is a financial asset. On the better reading it is not a virtual asset, even when the underlying is.

The licensing structure confirms the gap. Section 9 limits permissible activities to those in the First Schedule: wallet providers, exchanges, payment processors, brokers, investment advisers, managers, offering providers, tokenisation, token issuance platforms and stablecoin issuance. None of them is a derivatives activity. The Virtual Asset Service Providers Regulations, 2026 (Legal Notice 134 of 2026) say nothing about derivatives, margin or leverage either.

There is a counter-argument. Where a perp position is itself represented by a transferable token, someone could argue the token is a virtual asset. We think a court would look at substance over form: a tokenised derivative is still a derivative. Until the CMA says otherwise, nobody should build a business on the opposite view.

The derivatives regime still applies

If perps are derivatives, the home for them is the Capital Markets (Derivatives Markets) Regulations, 2015 (Legal Notice 37 of 2016), made under the Capital Markets Act. That regime is demanding:

• No one may establish or run a derivatives exchange without a CMA licence (regulation 3).
• The exchange needs a clearing house with clearing, settlement and default rules (regulations 42 to 44).
• Every derivatives contract must be approved by the CMA before it can be listed (regulation 50).
• Derivatives brokers must be licensed (regulation 52).
• A derivatives broker must conclude its derivatives business on or through the facilities of a derivatives exchange (regulation 77, headed “Trading of derivatives contracts off-exchange is illegal”).

The regime was built for a single regulated exchange with a legal operator and a clearing house. Offshore perp venues fail almost every element. On-chain exchanges fail all of them: there is often no operating company, the clearing house is code, and new contracts are listed by whoever posts a bond rather than with CMA approval.

What this means for businesses

Offshore perp platforms. A platform marketing leveraged crypto perps to Kenyans is likely carrying on unlicensed derivatives business. It cannot cure that with a VASP licence, because no VASP licence covers the product.

Kenyan VASPs. A licensed virtual asset exchange or broker cannot add perps to its menu under its VASP licence. Its licence is limited to the activity named in it, and section 12(3) of the Act makes it a condition of every licence that the activity is not modified without prior regulatory approval.

Introducers and app builders. Routing Kenyan clients to an offshore perp venue for a fee looks like derivatives broking. Regulation 77 means a licensed derivatives broker could not do it either, because the venue is not a licensed derivatives exchange.

Traders. Kenyan law does not make it an offence for an individual to trade perps offshore. But there is no Kenyan regulator to complain to, no investor compensation and no local recourse if the venue fails or freezes funds.

Where reform should go

The gap is a policy choice waiting to be made. Parliament could add a virtual asset derivatives platform and broker to the First Schedule, so that the Act’s AML, custody and conduct rules apply. Alternatively, the Cabinet Secretary could add a virtual asset module to the derivatives regulations. Either way, retail leverage needs a deliberate answer, whether a ban, a hard cap or tiered limits with a professional-client opt-up. Until then, the CMA’s regulatory sandbox is the only practical route to testing a crypto derivatives product in Kenya with the regulator’s knowledge.

Frequently asked questions

This article is general information on Kenyan law as at its publication date, not legal advice. Reading it does not create an advocate and client relationship.