Most crypto platforms used by Kenyans have no office, staff or bank account in Kenya. Many assume that keeps them outside Kenyan law. Since the Virtual Asset Service Providers Act, 2025 closed its transition period on 4 November 2026, that assumption is risky. The Act and the Virtual Asset Service Providers Regulations, 2026 reach platforms that never set foot in Nairobi. This article explains the “in or from Kenya” test, how far it goes, and what an offshore platform with Kenyan users should do about it.
The licensing requirement
Section 8(2) of the VASP Act says a person shall not carry on, or purport to carry on, the business of virtual asset services, or hold itself out as doing so, in or from Kenya unless licensed by the Capital Markets Authority or the Central Bank of Kenya. Breach is an offence. Under section 40(3), a company faces a fine of up to KES 25 million, and an individual up to KES 10 million, five years’ imprisonment, or both. Section 41 extends liability to directors and senior officers who knowingly authorised or permitted the offence.
Which regulator is relevant depends on the activity. Under the First Schedule to the Act, the CMA licenses exchanges, brokers, investment advisers, managers and offering providers, while the CBK licenses wallet providers, payment processors and stablecoin issuers. A platform that trades and custodies for Kenyan users may need both.
The Act itself does not define “in or from Kenya”. The Regulations do.
Regulation 4: the deeming rule
Regulation 4(2) of the VASP Regulations (Legal Notice 134 of 2026) deems a person to be operating in or from Kenya where it either:
- actively solicits or targets local consumers; or
- derives an economic benefit or income from Kenya,
regardless of whether it has a physical presence in Kenya. The two limbs are alternatives. Either one is enough, and neither requires any intention to break Kenyan law.
The solicitation limb is the familiar one. Kenyan-language marketing, M-Pesa deposit options, prices in shillings, Kenyan influencers, local sponsorships and Kenya-specific landing pages all point towards targeting.
The economic-benefit limb is far wider. Read literally, a platform that never markets to Kenya but earns trading fees from Kenyan users who found it on their own derives income from Kenya. So does a platform whose revenue only partly comes from Kenyans. We expect regulators to use this limb against platforms with a visible Kenyan user base and to treat it more cautiously at the margins, but the text does not say so.
Is there a reverse solicitation defence?
Not expressly. Some jurisdictions exempt services provided at a client’s own initiative. Neither the Act nor the Regulations contain that carve-out. A platform that genuinely does not target Kenya can point to the absence of solicitation, but if it still earns fees from Kenyan users, the economic-benefit limb remains open.
The practical defences are behavioural rather than legal: geoblocking Kenyan users, refusing Kenyan KYC documents, and not accepting shilling deposits. A platform that wants Kenyan revenue cannot rely on any of them.
Advertising is caught separately
Regulation 123 prohibits anyone from advertising or promoting a virtual asset service unless they comply with the Regulations, and regulation 125(2)(a) requires every advertisement to state the licensee’s full name, licence number and registered office. An unlicensed platform has no licence number to show. Influencers and agencies running Kenyan campaigns for an offshore exchange carry their own exposure.
What licensing would actually require
A foreign platform cannot be licensed as it stands. Section 8(1) limits eligibility to companies limited by shares registered under the Companies Act, which includes a foreign company registered in Kenya. The licensee must also keep a physical office in Kenya (section 19), open a Kenyan bank account (section 24(h)) and appoint a chief executive officer approved by the regulator (section 30). For a virtual asset exchange, the Fifth Schedule to the Regulations sets paid-up capital at KES 100 million; for a virtual asset broker, KES 10 million.
The real choice for an offshore platform is therefore between three options:
- Build a Kenyan licensed entity and move Kenyan users onto it.
- Partner with a Kenyan licensee, with the local entity owning the customer relationship. Regulation 113 requires 30 days’ prior regulatory approval for any outsourcing of operational functions, so the arrangement has to be disclosed and approved.
- Exit Kenya properly: geoblock, stop accepting Kenyan KYC and shilling rails, and stop marketing.
Doing nothing is the fourth option, and the one that creates criminal exposure for directors.
Products the Act does not cover
One caveat cuts the other way. Leveraged crypto perpetuals and futures are derivatives, which the Act’s definition of a virtual asset excludes, so no VASP licence covers them. Offering them to Kenyans engages the CMA’s derivatives regime instead. We explain that gap in our article on crypto perpetual futures in Kenya.
How We Can Help
Clay & Associates Advocates advises foreign exchanges, brokers and fintech platforms on whether their Kenyan activity is caught and how to structure a licensed entry or a clean exit. Our guide for foreign crypto businesses entering Kenya covers the set-up steps, and our explainer on the 4 November VASP deadline covers timing. Contact our financial services team to review your position.
Related reading: our articles on DeFi and non-custodial platforms in Kenya and licensing for crypto trading apps and front-ends, and on how crypto trading profits are taxed.
Sources: Virtual Asset Service Providers Act, 2025, sections 8, 19, 24, 30, 40 and 41 and the First Schedule; Virtual Asset Service Providers Regulations, 2026 (LN 134 of 2026), regulations 4, 113, 123 and 125 and the Fifth Schedule.
Frequently asked questions
Does an offshore crypto exchange need a Kenyan licence if it has no office in Kenya?
It can. Regulation 4(2) deems a platform to operate in or from Kenya if it targets Kenyan consumers or derives income from Kenya, whatever its physical presence.
Is there a reverse solicitation exemption in Kenya?
No express one. Not marketing to Kenya helps on the solicitation limb, but fees earned from Kenyan users can still satisfy the economic-benefit limb.
Can a foreign company hold a Kenyan VASP licence?
Yes, if it is a company limited by shares registered under the Companies Act, maintains a physical office in Kenya and meets the capital and governance requirements.
Who is liable if an unlicensed platform serves Kenyans?
The company commits the offence, and under section 41 so do directors and senior officers who knowingly authorised or permitted it.
Need advice on your own matter?
Tell us what you are dealing with. You will know what it involves and what it costs before you commit.
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.
