Kenya moved from taxing an unregulated market to licensing it. The Virtual Asset Service Providers Act 2025 creates the country's first framework, dividing supervision between the Central Bank of Kenya, which licenses stablecoin issuers, wallet providers, and payment-related services, and the Capital Markets Authority, which licenses exchanges, brokers, and tokenization platforms, with governance, local-presence, and AML requirements; implementation and licensing have been standing up since assent. The Act followed FATF grey-listing pressure and years in which M-Pesa-adjacent crypto adoption ran far ahead of law.
Tax came first and has been recalibrated: the 3% digital asset tax on gross transaction value introduced in 2023 was replaced in the Finance Act 2025 with a 10% excise on transaction fees charged by platforms, a shift the industry sought to keep exchanges onshore.
The instruments
Virtual Asset Service Providers Act 2025
First Kenyan crypto framework: CBK licenses stablecoin issuance, wallets, and payment services; the CMA licenses exchanges, brokers, and investment-related services; both apply fit-and-proper, local presence, and AML/CFT requirements, with licensing phasing in through implementing regulations.
Digital asset taxation
The 3% digital asset tax on gross transfer value was replaced with a 10% excise duty on platform transaction fees, moving the burden from turnover to intermediation charges.