Tokenising Kenyan Real Estate: What Regulation 62 Requires Before You Offer a Single Token

Property is the obvious real-world asset to put on a blockchain, and Kenya’s Virtual Asset Service Providers Regulations, 2026 (Legal Notice 134 of 2026) now regulate it directly. Part VII, regulations 61 to 65, deals with the tokenisation of real-world assets. Our earlier guide to token issuance and tokenisation platforms covers the licence that a tokenisation business needs. This article deals with a different question: what a property owner or developer must show the Capital Markets Authority before it can offer tokens backed by land or buildings. Real estate tokenisation in Kenya starts with the asset, and regulation 62 sets the entry test.

Two approvals, not one

Regulation 61 requires the person undertaking the activity of virtual asset tokenisation to hold a licence from the Capital Markets Authority. Regulation 62 adds a second requirement. A person seeking to undertake a virtual asset offering of a tokenised real-world asset must apply to the Capital Markets Authority for approval of that offering. A licensed tokenisation business therefore still needs approval for each property offering, and a property owner that is not itself licensed will need to work through one that is.

What the application for approval must contain

Under regulation 62(2), the application must be accompanied by:

1. a white paper containing the information required by regulation 63;
2. the governance structure of the issuer, including the board and senior management;
3. the policies and procedures for monitoring the cycle of issuance and offering of tokenised real-world assets;
4. the place where the proceeds raised will be transferred or deposited;
5. a report by an independent valuer showing the asset’s fair market value;
6. disclosure of the underlying technology;
7. evidence that the asset can be tokenised and that ownership can be established;
8. an agreement on the proposed custody arrangements, including the person holding the title and custody of the asset;
9. evidence that the asset is clear of any encumbrances; and
10. the application fee in the First Schedule.

The regulation also states two conditions on the asset itself. It must have clear legal rights, and it must be independently verifiable as to its valuation, existence and condition (regulation 62(3)).

What real estate tokenisation means for a property

For land or buildings, three of those requirements do most of the work.

Clear of encumbrances. A property that carries a charge, a caveat or a similar interest is unlikely to meet regulation 62(2) as drafted. Before any structuring, obtain an official search and resolve or release each entry on the title. The Regulations do not say whether a lender’s consent or a partial release would satisfy the requirement, and we would raise it with the Capital Markets Authority in advance.

The person holding the title. Regulation 62(2) asks for an agreement on custody, including who holds the title. In a property structure this points to a holding vehicle or trustee that keeps title while investors hold tokens. The Regulations do not prescribe the vehicle. That choice has consequences for who can invest, which we come to below.

An independent valuation. The valuer’s report on fair market value is required, and regulation 63(2)(i) separately requires the white paper to set out the valuation methodology and reasonable assumptions. The valuer needs to be independent of the issuer, and the report needs to support the figures in the white paper.

What the white paper must disclose

Regulation 63(1) requires full and accurate disclosure that lets an investor make an informed assessment before subscribing. Among the matters regulation 63(2) lists are the following:

1. the directors, senior management, key personnel and advisers, with their nationality, address, qualifications and experience;
2. key information about the tokenised assets, including their location;
3. a clear and accurate description of the rights or value the token grants or purports to grant;
4. whether the token represents a direct right of ownership of the asset or a fractional proportion of it, and how that ownership or fractionalisation is established;
5. whether transactions in the tokenised assets are subject to legal or regulatory requirements;
6. the policy for creating and destroying tokens in circulation and the consequences;
7. the custody arrangement and the custodians involved;
8. assessments of credit, market, counterparty and liquidity risk in managing, holding or liquidating the asset;
9. the valuation methodology; and
10. how tokens will be traded or transferred, and the redemption mechanism upon asset disposal.

Regulation 64 then requires the Capital Markets Authority’s approval for any later change to the business model that is likely to significantly influence a holder’s purchase decision.

Listing, smart contracts and secondary trading

Regulation 65 requires an issuer to create the tokens on a distributed ledger platform representing fractional ownership of, or rights to, the asset, and to code the rules of ownership, transferability, compliance and profit distribution into smart contracts or equivalent mechanisms. The tokens must be distributed through a primary offering and then listed on a licensed token issuance platform to give investors liquidity and an exit. The issuer must also disclose any further issuance of tokens against the same asset and the introduction of smart contracts or equivalent mechanisms affecting the tokens. Property tokens therefore cannot be sold and left unlisted, and the issuer has to line up a licensed platform.

Costs and capital

The First Schedule sets an application fee of KES 100,000 and a licence fee of KES 500,000 for the tokenisation licence. It also sets an approval fee for a tokenisation offering of 0.25 per cent of the value of the successful offer, subject to a minimum of KES 200,000 and a maximum of KES 30 million. The Fifth Schedule requires a tokenisation licensee to hold paid-up capital of KES 10 million and liquid capital of KES 2 million or 8 per cent of total liabilities, whichever is higher.

The land-law question the Regulations leave open

We did not find in regulations 61 to 65 any provision on who may lawfully hold an interest in Kenyan land through a token. Article 65 of the Constitution allows a person who is not a citizen to hold land on leasehold tenure only, for no more than ninety-nine years. It treats a body corporate as a citizen only if wholly owned by citizens, and treats trust property as held by a citizen only if all the beneficial interest belongs to citizens. If a token gives a foreign investor a fractional interest in the land, an issuer needs a clear analysis of whether Article 65 is engaged and how the structure deals with it. Our guide to non-citizen land ownership sets out the constitutional limits.

Property investors also have a regulated alternative in real estate investment trusts. See our guide to real estate investment structures in Kenya.