Kenya

Retail_Trading_Status

Allowed-Unregulated High Confidence

Status Changed

Previous status: Gray-Zone

Reconciled from live analysis after human review confirmed status as Allowed-UnRegulated. Original new analysis incorrectly classified as Gray-Zone. The live analysis correctly identifies that retail trading is allowed but unregulated, and the latest analysis confirms that the VASP Act 2025 has been enacted but is not yet operational, meaning the market remains unregulated. Therefore, the status remains Allowed-UnRegulated.

Analysis ID: #853
Version: Latest
Created: 2025-12-13 07:08
Run: aec6ef33...
History: View all versions
Workflow Stage: Reconciled

Executive Summary

Cryptocurrency trading is currently 'Allowed-UnRegulated' in Kenya, but lacks a specific legal framework despite significant adoption. The Central Bank of Kenya (CBK) has issued warnings regarding risks, and banking restrictions are in place. The government has enacted the Virtual Asset Service Providers Act, 2025, which establishes a dual regulatory regime under the CBK and CMA, but as of late 2025, no licenses have been issued and the framework is not yet operational. While awaiting comprehensive regulation, the tax regime has shifted from a 3% Digital Asset Tax (DAT) to a 10% Excise Duty on platform fees.

Key Pillars

The primary regulators involved in developing and implementing a framework are the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA), working with the National Treasury and the Financial Reporting Centre (FRC). The Virtual Asset Service Providers Act, 2025, mandates licensing for VASPs, but licensing has not yet commenced. Core compliance requirements, as proposed, include AML/CFT standards and KYC checks. The Capital Markets Authority (CMA) established a Regulatory Sandbox in 2019.

Landmark Laws

CBK Circular No. 14 (2015): Issued on December 18, 2015, cautioned financial institutions against dealing in cryptocurrencies or providing services to crypto-related entities.
Finance Act, 2023: Effective September 1, 2023, this act introduced a 3% Digital Asset Tax (DAT) on cryptocurrency transactions. Its legality was upheld by the Supreme Court in October 2024.
Finance Act 2025: Repealed the 3% DAT and replaced it with a 10% Excise Duty on the fees charged by crypto platforms, effective July 1, 2025.
Virtual Asset Service Providers Act, 2025 (Act No. 20 of 2025): Enacted on October 21, 2025, effective November 4, 2025. Establishes a comprehensive regulatory framework for VASPs, but licensing is pending subsidiary regulations from the National Treasury.
Proposed Virtual Assets Service Providers (VASP) Bill, 2025: The draft bill that preceded the Act.

Considerations

Cryptocurrencies are not legally classified within the existing framework, leading to uncertainty. The Central Bank of Kenya (CBK) has raised concerns about volatility, potential for fraud, lack of consumer protection, and use in illicit activities like money laundering. Banking restrictions push crypto activities outside the formal sector, increasing opacity. The VASP Act 2025 has been enacted but is not yet operational, as no licenses have been issued. The tax regime has shifted from a 3% DAT to a 10% Excise Duty on platform fees. Kenya's push for regulation is partly driven by the need to exit the FATF Grey List.

Notes

The Capital Markets Authority (CMA) established a Regulatory Sandbox in 2019. The IMF Technical Assistance Report (Jan 2025) highlights that the current situation leads to opaque company and transaction structures and a high amount of legal uncertainty. The proposed VASP bill (now Act) aims to end anonymity in crypto transactions. The government anticipates the enactment of a regulatory framework, including FATF Recommendation 15. The VASP Act 2025 is effective, but a joint notice from the CBK and CMA on November 18, 2025, clarified that no licenses have been issued and licensing will begin after the National Treasury issues detailed regulations.

Remaining Uncertainties

When will the National Treasury publish the subsidiary regulations required to start the licensing process?
Will the 'fit and proper' requirements for licensing effectively exclude smaller local startups in favor of large international exchanges?
How will the transition from the 3% DAT to the 10% Excise Duty be enforced for peer-to-peer (P2P) transactions that occur off-platform?

Detailed Explanation

Cryptocurrency trading in Kenya is currently in a state of 'Allowed-Unregulated,' meaning it is permitted but operates without a specific, fully operational legal framework despite significant public adoption. The regulatory landscape is characterized by caution from authorities and a transitional phase towards formal oversight. The Central Bank of Kenya (CBK) has been a primary voice of warning, issuing Circular No. 14 in 2015 to caution financial institutions against dealing in cryptocurrencies or servicing crypto-related entities, a stance that has effectively created banking restrictions and pushed activities into less transparent areas of the economy. This lack of formal classification and clear rules has, as noted in an IMF Technical Assistance Report from January 2025, led to opaque company and transaction structures and a high degree of legal uncertainty. The government's push for comprehensive regulation is partly motivated by the need to address these issues and facilitate Kenya's exit from the FATF Grey List. A significant milestone was reached with the enactment of the Virtual Asset Service Providers Act, 2025 (Act No. 20 of 2025) on October 21, 2025, which became effective on November 4, 2025. This Act establishes a dual regulatory regime under the CBK and the Capital Markets Authority (CMA), mandating licensing for Virtual Asset Service Providers (VASPs) and aiming to end anonymity in crypto transactions. However, as clarified in a joint notice from the CBK and CMA on November 18, 2025, the framework is not yet operational; no licenses have been issued, and licensing will only commence after the National Treasury issues the necessary subsidiary regulations. Parallel to these regulatory developments, the tax treatment of cryptocurrency has evolved. The Finance Act, 2023, introduced a 3% Digital Asset Tax (DAT) on transactions, a measure whose legality was upheld by the Supreme Court in October 2024. This was subsequently replaced by the Finance Act 2025, which repealed the DAT and instituted a 10% Excise Duty on the fees charged by cryptocurrency exchange platforms, effective July 1, 2025. While the Capital Markets Authority (CMA) established a Regulatory Sandbox in 2019 to foster innovation, the overarching environment remains in a holding pattern, awaiting the full implementation of the VASP Act 2025 to provide the definitive legal structure and consumer protections currently absent.

Summary Points

I. Regulatory Status
* Allowed-Unregulated: Cryptocurrency trading is permitted but lacks a specific, operational legal framework.
* The Virtual Asset Service Providers Act, 2025 has been enacted but is not yet operational; no licenses have been issued as of late 2025.
* The regulatory framework is in a transitional phase, awaiting subsidiary regulations from the National Treasury.

II. Key Regulatory Bodies
* Central Bank of Kenya (CBK): Primary financial regulator; has issued warnings and will be a key regulator under the new VASP Act.
* Capital Markets Authority (CMA): Co-regulator under the VASP Act; established a Regulatory Sandbox in 2019.
* National Treasury: Responsible for issuing detailed regulations to operationalize the VASP Act.
* Financial Reporting Centre (FRC): Involved in developing the anti-money laundering framework.

III. Important Legislation
* CBK Circular No. 14 (2015): Dated December 18, 2015; cautioned financial institutions against dealing in or servicing cryptocurrency entities.
* Finance Act, 2023: Effective September 1, 2023; introduced a 3% Digital Asset Tax (DAT) on crypto transactions, upheld by the Supreme Court in October 2024.
* Finance Act 2025: Repealed the 3% DAT and replaced it with a 10% Excise Duty on platform fees, effective July 1, 2025.
* Virtual Asset Service Providers Act, 2025 (Act No. 20 of 2025): Enacted October 21, 2025, effective November 4, 2025. Establishes a comprehensive licensing regime for VASPs under the CBK and CMA.
* Proposed Virtual Assets Service Providers (VASP) Bill, 2025: The draft legislation that preceded the enacted Act.

IV. Compliance Requirements
* As proposed under the VASP Act 2025, core requirements will include AML/CFT standards and KYC checks to end transaction anonymity.
* Formal licensing for Virtual Asset Service Providers will be mandatory once the regime is operational.

V. Notable Restrictions or Limitations
* Banking restrictions are in place due to the CBK's 2015 circular, pushing crypto activities outside the formal financial sector and increasing opacity.
* Cryptocurrencies lack a formal legal classification, creating uncertainty.
* The Central Bank of Kenya has repeatedly warned the public about risks including volatility, fraud, lack of consumer protection, and use in illicit activities.

VI. Recent Developments or Notes
* A joint notice from the CBK and CMA on November 18, 2025, clarified that no VASP licenses have been issued and licensing will begin after the National Treasury issues regulations.
* Kenya's regulatory push is partly driven by the need to address FATF recommendations and exit the FATF Grey List.
* The IMF Technical Assistance Report (Jan 2025) highlighted that the current situation results in opaque structures and high legal uncertainty.
* The Capital Markets Authority (CMA) Regulatory Sandbox, established in 2019, remains a feature of the innovation landscape.

Full Analysis Report

Retail Trading Status: Cryptocurrencies in Kenya

Report Date: 2025-12-12

Topic: Retail_Trading_Status

Description: An assessment of whether individual citizens and residents in Kenya are legally permitted to buy, sell, and hold cryptocurrencies, detailing the regulatory environment surrounding this activity.

Retail_Trading_Status: Allowed-UnRegulated

1. Current Status:

Allowed-UnRegulated

2. Detailed Narrative Explanation:

The status of retail cryptocurrency trading in Kenya is Allowed-UnRegulated. There is no law prohibiting individuals from buying, selling, or holding cryptocurrencies. However, the activity operates without a comprehensive regulatory framework, leaving participants without formal consumer protections and facing significant risks highlighted by financial authorities.

The Central Bank of Kenya (CBK) has maintained a cautionary stance since 2015, warning the public about the risks of cryptocurrencies and advising financial institutions against servicing crypto-related entities (CBK Circular No. 14, 2015). This has created banking restrictions that push trading activity to peer-to-peer platforms and international exchanges.

A significant regulatory milestone was reached with the enactment of the Virtual Asset Service Providers Act, 2025 (Act No. 20 of 2025), which became effective on November 4, 2025. This law establishes a formal licensing regime for crypto service providers under the joint oversight of the CBK and the Capital Markets Authority (CMA). However, in a joint notice dated November 18, 2025, the CBK and CMA clarified that no licenses have been issued and that the licensing process will only begin after the National Treasury publishes detailed implementing regulations. Consequently, the comprehensive framework envisioned by the Act is not yet operational.

On taxation, the government initially imposed a 3% Digital Asset Tax (DAT) via the Finance Act, 2023, which was upheld by the Supreme Court in October 2024. This was subsequently replaced by a 10% Excise Duty on platform fees under the Finance Act 2025, effective July 1, 2025.

Therefore, while the law now recognizes and aims to regulate cryptocurrency activities, the absence of licensed entities and operational rules means the market remains effectively unregulated. Retail trading is permitted but occurs in an environment where official warnings about risks are still valid, banking access is restricted, and the promised regulatory protections are not yet in force.

3. Specific, Relevant Text Excerpts:

Central Bank of Kenya & Capital Markets Authority Joint Notice (November 2025): "Consequently, the licensing of VASPs will commence upon issuance of these Regulations... no entity has yet received approval." (Source: CBK & CMA Joint Notice, 2025-11-18).
Virtual Asset Service Providers Act, 2025: "The Virtual Assets Service Providers Act, 2025... became effective on November 4, 2025... However, the CMA stated that while the Act establishes the legal groundwork for licensing, no virtual asset service providers have yet been licensed." (Source: The Kenya Times, 2025-11-18).
Central Bank of Kenya (December 2015): "The Central Bank of Kenya (CBK) wishes to advise the public that virtual currencies such as Bitcoin are not legal tender in Kenya and therefore no protection exists..." (Summary of CBK Public Notice on Virtual Currencies).
Finance Act 2025: "Effective July 1, 2025, Kenya has abolished the 3% DAT... and replaced it with a 10% excise duty on the service fees charged by platforms." (Source: Chasing Mavericks, 2025-07-01).

4. Direct, Accessible URL Links to Sources:

CBK & CMA Joint Notice on VASP Licensing: https://www.centralbank.go.ke
News Article on VASP Act Effective Date: https://thekenyatimes.com/business/business-news/new-cryptocurrency-rules-take-effect-as-kenya-prepares-for-licensing-of-virtual-asset-providers/
Analysis on Excise Duty Change: https://chasingmavericks.co.ke/understanding-kenyas-new-excise-duty-on-digital-assets/
Capital Markets Authority (Kenya): https://www.cma.or.ke

(Disclaimer: The regulatory landscape can change. The information provided is based on the understanding as of the report date. Users should verify with primary sources for the most current information.)

## Retail Trading Status: Cryptocurrencies in Kenya

**Report Date:** 2025-12-12

**Topic:** Retail_Trading_Status

**Description:** An assessment of whether individual citizens and residents in Kenya are legally permitted to buy, sell, and hold cryptocurrencies, detailing the regulatory environment surrounding this activity.

---

### **Retail_Trading_Status: Allowed-UnRegulated**

---

**1. Current Status:**

Allowed-UnRegulated

**2. Detailed Narrative Explanation:**

The status of retail cryptocurrency trading in Kenya is **Allowed-UnRegulated**. There is no law prohibiting individuals from buying, selling, or holding cryptocurrencies. However, the activity operates without a comprehensive regulatory framework, leaving participants without formal consumer protections and facing significant risks highlighted by financial authorities.

A significant regulatory milestone was reached with the enactment of the **Virtual Asset Service Providers Act, 2025** (Act No. 20 of 2025), which became effective on November 4, 2025. This law establishes a formal licensing regime for crypto service providers under the joint oversight of the CBK and the Capital Markets Authority (CMA). However, in a joint notice dated November 18, 2025, the CBK and CMA clarified that **no licenses have been issued** and that the licensing process will only begin after the National Treasury publishes detailed implementing regulations. Consequently, the comprehensive framework envisioned by the Act is not yet operational.

**3. Specific, Relevant Text Excerpts:**

* **Central Bank of Kenya & Capital Markets Authority Joint Notice (November 2025):** "Consequently, the licensing of VASPs will commence upon issuance of these Regulations... no entity has yet received approval." (Source: CBK & CMA Joint Notice, 2025-11-18).
* **Virtual Asset Service Providers Act, 2025:** "The Virtual Assets Service Providers Act, 2025... became effective on November 4, 2025... However, the CMA stated that while the Act establishes the legal groundwork for licensing, no virtual asset service providers have yet been licensed." (Source: The Kenya Times, 2025-11-18).
* **Central Bank of Kenya (December 2015):** "The Central Bank of Kenya (CBK) wishes to advise the public that virtual currencies such as Bitcoin are not legal tender in Kenya and therefore no protection exists..." (Summary of CBK Public Notice on Virtual Currencies).
* **Finance Act 2025:** "Effective July 1, 2025, Kenya has abolished the 3% DAT... and replaced it with a 10% excise duty on the service fees charged by platforms." (Source: Chasing Mavericks, 2025-07-01).

**4. Direct, Accessible URL Links to Sources:**

* **CBK & CMA Joint Notice on VASP Licensing:** [https://www.centralbank.go.ke](https://www.centralbank.go.ke)
* **News Article on VASP Act Effective Date:** [https://thekenyatimes.com/business/business-news/new-cryptocurrency-rules-take-effect-as-kenya-prepares-for-licensing-of-virtual-asset-providers/](https://thekenyatimes.com/business/business-news/new-cryptocurrency-rules-take-effect-as-kenya-prepares-for-licensing-of-virtual-asset-providers/)
* **Analysis on Excise Duty Change:** [https://chasingmavericks.co.ke/understanding-kenyas-new-excise-duty-on-digital-assets/](https://chasingmavericks.co.ke/understanding-kenyas-new-excise-duty-on-digital-assets/)
* **Capital Markets Authority (Kenya):** [https://www.cma.or.ke](https://www.cma.or.ke)

*(Disclaimer: The regulatory landscape can change. The information provided is based on the understanding as of the report date. Users should verify with primary sources for the most current information.)*

Source Evidence

Primary and secondary sources cited in this analysis

New Cryptocurrency Rules Take Effect As Kenya Prepares For Licensing Of Virtual Asset Providers primary (news)

2025-11-18

"The Virtual Assets Service Providers Act, 2025... became effective on November 4, 2025... However, the CMA stated that while the Act establishes the legal groundwork for licensing, no virtual asset service providers have yet been licensed."

CBK: Licensing of crypto service providers to begin after new regulations are issued primary (news)

2025-11-18

"Consequently, the licensing of VASPs will commence upon issuance of these Regulations... no entity has yet received approval."

Kenya's Supreme Court upholds finance act, digital assets tax primary (news)

2024-10-30

"The Supreme Court of Kenya has ruled that the Finance Act 2023, which stipulates a 3% digital asset tax (DAT) on cryptocurrency transactions, is legal."

Understanding Kenya's new Excise duty on Digital Assets primary (analysis)

2025-07-01

"Effective July 1, 2025, Kenya has abolished the 3% DAT... and replaced it with a 10% excise duty on the service fees charged by platforms."

Kenya nears landmark crypto law to regulate digital assets secondary (news)

2025-10-06

"Under the revised bill, the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) will oversee licensing and supervision of virtual asset providers."