Cryptocurrency Kenya remains subject to an evolving regulatory framework, with the CBK and CMA both issuing guidance on digital asset activities. Cryptocurrency and digital asset regulation in Kenya sits at the intersection of the Central Bank of Kenya’s (CBK) currency and payment systems oversight, the Capital Markets Authority’s (CMA) securities regulation, and emerging policy initiatives by the National Treasury. Kenya has been cautious in its approach to cryptocurrency, with the CBK issuing several caution notices to the public about the risks of virtual currencies while the CMA has moved to bring certain digital assets within the capital markets regulatory framework. As a result, the regulatory position in Kenya is evolving and businesses operating in the digital assets space must monitor regulatory developments closely.
The CBK’s Position on Cryptocurrency in Kenya
The CBK has historically taken a cautious stance on cryptocurrency, issuing public notices in 2015, 2018, and again in 2022 cautioning the public against using, holding, or trading in virtual currencies. The CBK’s position has been that virtual currencies are not legal tender in Kenya, are not regulated under the CBK Act or the National Payment System Act, and that persons dealing in virtual currencies do so at their own risk without CBK protection. Despite these cautions, the CBK has not enacted an outright ban on cryptocurrency ownership or trading by private individuals.
The position shifted notably with the passage of the Central Bank of Kenya (Amendment) Act 2021, which expanded the CBK’s mandate to include oversight of digital financial services and provided a legislative basis for regulating digital currencies, including potentially a Central Bank Digital Currency (CBDC). The CBK published a discussion paper on a CBDC for Kenya in 2023, signalling an increasingly structured approach to digital currencies.
CMA Regulation of Digital Assets as Securities
The Capital Markets (Amendment) Act 2023 extended the CMA’s jurisdiction to cover digital securities, allowing securities to be issued, transferred, and held in digital or tokenised form. This brings security tokens within the CMA’s regulatory framework, meaning that any person issuing a token that constitutes a security (a share, bond, or collective investment scheme unit) must comply with CMA licensing and disclosure requirements. Utility tokens and purely payment tokens may fall outside the CMA’s securities regulatory scope, though the boundary is not always clear.
The CMA’s regulatory sandbox has been used by several digital asset innovators to test products under controlled conditions. A company seeking to offer a tokenised investment product in Kenya should first apply to the CMA sandbox before seeking a full CMA licence.
Cryptocurrency Exchanges and Payment Service Providers
Cryptocurrency exchanges operating in Kenya occupy an ambiguous regulatory space. They are not currently required to hold a CBK licence as payment service providers under the National Payment System Act unless they handle Kenyan shillings in a manner that constitutes a payment service. However, exchanges that enable fiat-to-crypto conversion may be caught by the National Payment System Act’s broad definition of payment service providers.
The Kenya Revenue Authority has clarified that gains from cryptocurrency trading are subject to capital gains tax or income tax depending on the trading pattern. The KRA’s domestic taxes department has issued guidance treating frequent cryptocurrency trading as a business activity subject to income tax.
AML and Know-Your-Customer Obligations
Cryptocurrency businesses operating in Kenya are subject to Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) obligations under POCAMLA 2009 whether or not they fall within a specific licensing category. The Financial Reporting Centre (FRC) has designated Virtual Asset Service Providers (VASPs) as reporting entities under Kenya’s AML framework, consistent with FATF Recommendation 15 on virtual assets. VASPs must maintain customer due diligence records, file suspicious transaction reports, and appoint a Money Laundering Reporting Officer.
The Virtual Asset Service Providers Act, 2025
The AML reporting-entity designation above is no longer the only, or even the main, regulatory touchpoint for VASPs. The Virtual Asset Service Providers Act, 2025 (Act No. 20 of 2025) was assented to on 15 October 2025, gazetted on 21 October 2025, and came into force on 4 November 2025. It creates, for the first time, a dedicated licensing regime for virtual asset activity in Kenya, replacing the earlier proposal for a standalone Virtual Assets Regulatory Authority with a dual-regulator model: the Central Bank of Kenya licenses stablecoin issuance and certain payment-related functions, while the Capital Markets Authority licenses exchanges, brokers, investment advisers, and trading platforms. The Act is activity-based and captures VA exchanges, custodial wallet providers, brokers, payment processors, investment advisers, and token or stablecoin issuers, while expressly excluding closed-ecosystem value such as in-game currency, central bank digital currencies, and most non-payment NFTs. Only a company limited by shares, either Kenyan-incorporated or a registered foreign company with a physical office in Kenya, may hold a licence, and licensees must meet prescribed capital, solvency, and insurance requirements. As of this writing, CBK and CMA have confirmed that no VASP has yet been licensed under the Act: the National Treasury is still finalising the implementing regulations that will set out licence categories, application forms, and fees, and licensing will only commence once those regulations are gazetted. A business operating in this space should treat the Act as already binding, since its core obligations took effect in November 2025, while checking directly with CBK or CMA on the current state of the implementing regulations before assuming a specific licence category or timeline applies.
The National Blockchain Policy and Future Regulation
Kenya’s National Blockchain Policy, published by the ICT Authority, provides a framework for government use of blockchain technology but also signals a direction for broader digital asset regulation. A number of government initiatives including land registry digitalisation, KRA tax receipts, and the NTSA vehicle registry are exploring blockchain applications. Comprehensive digital assets legislation for Kenya is expected to follow as the policy framework matures.
For legal advice on cryptocurrency and digital asset businesses in Kenya, including regulatory compliance, AML obligations, and CMA sandbox applications, our regulatory compliance practice and financial services team provide specialist advisory services. Technology businesses should also consult our technology and startups practice.
NFTs and Digital Collectibles in Kenya
Non-fungible tokens (NFTs) present a novel regulatory question in Kenya. An NFT representing a digital artwork or collectible may fall outside the CMA’s securities regulation if it is purely a collectible with no investment return expectation. However, an NFT that represents a fractional interest in a revenue-generating asset, or that is marketed with an expectation of profit, may be characterised as a security subject to CMA regulation. The absence of specific NFT legislation in Kenya means that the regulatory treatment of any particular NFT depends on a fact-specific analysis of its economic characteristics. Creators and platforms offering NFTs in Kenya should obtain legal advice on their regulatory status before launch.
Decentralised Finance (DeFi) and Kenyan Law
Decentralised finance protocols that enable lending, borrowing, and yield farming without intermediaries present significant regulatory challenges. A DeFi protocol that accepts deposits from Kenyan users and pays interest on those deposits may constitute deposit-taking business regulated by the CBK under the Banking Act (Cap 488). A DeFi protocol that enables trading in tokenised securities may constitute an unlicensed securities exchange subject to CMA regulation. The global nature of DeFi protocols makes jurisdictional application of Kenyan law complex, but Kenyan users of DeFi protocols and Kenyan developers of DeFi applications should be aware of the regulatory exposure.
Tax Treatment of Cryptocurrency Gains in Kenya
The Kenya Revenue Authority has clarified that gains from cryptocurrency trading are taxable in Kenya. Frequent trading activity is treated as a business, with gains taxable as business income subject to income tax at the applicable rate. Occasional trades may be treated as capital gains subject to capital gains tax at 15% on the net gain. Cryptocurrency miners are taxed on the market value of cryptocurrency mined as income at the time of mining. Businesses that accept cryptocurrency as payment for goods or services must convert the cryptocurrency value to Kenya shillings for VAT and income tax purposes at the exchange rate prevailing on the date of transaction. Cryptocurrency holders and traders should maintain detailed transaction records to support accurate tax reporting.
Central Bank Digital Currency (CBDC) Developments in Kenya
The CBK’s 2023 discussion paper on a potential Central Bank Digital Currency for Kenya represented a significant step toward formalising the regulatory treatment of digital currencies. A Kenyan CBDC, if implemented, would be legal tender issued by the CBK in digital form, distinct from commercial bank money and from private cryptocurrencies. The CBK’s paper explored design questions including retail vs wholesale CBDC, the role of commercial banks in distribution, privacy and security architecture, and financial inclusion implications. No timeline for CBDC implementation has been announced, but the discussion paper signals that the CBK is actively preparing for a more structured digital currency environment. Businesses in the financial technology and payments space should monitor CBK CBDC developments through the Central Bank of Kenya website.
For businesses and individuals navigating Kenya’s evolving cryptocurrency landscape, the CBK publishes updated guidance through its official website at centralbank.go.ke. Our related guides on the regulatory sandbox and FRC reporting obligations cover the overlapping compliance framework applicable to digital asset businesses in Kenya.
