For crypto exchanges in Kenya, legitimacy now comes with a Sh50 million receipt
Virtual asset exchanges, wallet providers, and stablecoin issuers will face the highest capital thresholds under proposed licensing rules aimed at investor protection.
Kenya is moving to formalise the cryptocurrency market by setting minimum capital thresholds for firms dealing in virtual assets, with exchanges, wallet providers, and stablecoin issuers facing the steepest requirements.
Under proposed regulations, these operators will be required to hold Sh50 million in paid-up capital, an additional Sh50 million in shareholders’ funds, and at least Sh10 million in liquid capital. The measures are designed to create financial buffers for investors trading digital assets such as cryptocurrencies.
Other players in the ecosystem, including payment processors, brokers, investment advisers, asset managers, tokenisation firms, and initial coin offer platforms, will face lower thresholds. Their paid-up capital requirements range from Sh2.5 million to Sh30 million, depending on the nature and scale of operations.
All licensed providers will also be required to maintain insurance cover to protect client assets. The draft regulations specify professional indemnity insurance of not less than Sh500,000, alongside any additional policies necessary to reflect the risks carried by each business model.
Regulatory oversight will sit with the Capital Markets Authority and the Central Bank of Kenya, which will jointly assess whether firms hold sufficient capital. Both regulators retain the discretion to raise minimum capital levels where risk exposure warrants it.
The rules further require service providers to hold reserve assets within Kenya equal to all client liabilities. This effectively mandates full backing of customer assets at all times, a provision intended to limit losses in the event of firm failure.
The regulations flow from the recently enacted Virtual Asset Service Providers Act, which establishes a legal framework for licensing and supervising crypto-related businesses. Both the law and the accompanying regulations stem from a national virtual assets policy developed by a multi-agency task force led by the CBK and CMA.
Kenya has emerged as a significant crypto market, ranking fifth globally by transaction volume, driven largely by stablecoin use. The country trails only Ukraine, the United States, Nigeria, and Vietnam, according to the 2025 World Crypto Rankings report by exchange operator Bybit.
The report points to widespread familiarity with on-chain value transfers, particularly in retail transactions, a factor regulators now appear keen to match with tighter operational, capital, and consumer protection standards.
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