Crypto Industry Raises Alarm Over Proposed VASP Law in Kenya
Nairobi — Kenya’s plan to regulate digital assets is raising concerns among crypto players, who fear the proposed Virtual Asset Service Providers (VASP) Bill 2025 could push out small-scale operators and discourage new investment.
The bill, now before Parliament, proposes strict penalties for violations, including fines of up to Ksh10 million and prison terms of up to five years. It also sets up a shared oversight framework between the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA).
The legislation is designed to establish clear legal and regulatory standards for virtual assets and their service providers. However, some in the sector are warning that the approach could be too harsh for startups and smaller platforms.
Edline Murungi, a senior legal advisor at Yellow Card, said the current structure risks locking out smaller players. “The government should consider a tiered licensing and penalties system,” she said. “Without this, the cost of compliance could overwhelm new or small businesses.”
Regulatory balance or overreach?
The government has framed the bill as a necessary step to stamp out fraud and build trust in digital assets. Officials argue that tough penalties will help weed out bad actors operating under weak regulatory oversight.
Still, industry insiders believe the law can be effective without being punitive. Many support regulation but want provisions that reflect the diverse capacities of those in the sector.
The proposed framework assigns regulatory duties to both CBK and CMA, aligning with global efforts to bring cryptocurrency under formal financial supervision. Kenya has seen steady growth in digital asset activity, with platforms offering services ranging from cross-border payments to token trading.
Opportunity for leadership in Africa
If passed and implemented with balance, the VASP Bill could put Kenya ahead of most African countries in terms of crypto regulation. Its backers say clear laws will attract international investors wary of unregulated markets.
“Kenya has a chance to lead the region in crypto governance, but the rules must encourage growth not stifle it,” said one industry participant involved in policy consultations.
The bill remains under parliamentary review. Stakeholders are pushing for amendments before it reaches a final vote.
As Kenya eyes greater visibility in the global digital economy, the outcome of this legislation could shape the future of crypto innovation in the country.
