Stablecoin Operators See Growing Pressure Under Kenya’s New Rules

Industry executives say Kenya’s virtual asset regulations are creating new pressure around banking, insurance, and licensing readiness

Kenya’s emerging framework for digital asset businesses is entering a more difficult phase as operators begin preparing for licensing, compliance, and oversight requirements that many say are still hard to implement in practice.

At the Kenya Blockchain & Crypto Conference 2026, executives from Tether, Yellow Card, legal advisory firms, and industry associations said the country’s new virtual asset regime has brought long-awaited legal recognition to the sector, but also introduced operational obligations that could reshape how crypto firms function in Kenya.

The discussion focused on the implementation phase of Kenya’s Virtual Asset Service Providers framework, which is expected to be followed by more detailed regulations in the coming months.

Industry participants repeatedly described regulation as preferable to outright prohibition. Speakers pointed to several African jurisdictions where authorities initially responded to digital assets with restrictions or warnings instead of formal licensing systems.

Edline Murungi, Group Head of Policy and Senior Legal Counsel at Yellow Card, said operators are now preparing for a more demanding compliance environment as regulators move from policy drafting into enforcement. She said firms operating across multiple African jurisdictions are already restructuring governance, reporting, and internal oversight systems to align with emerging licensing requirements.

Murungi also raised concerns about whether some obligations contained in Kenya’s draft regulations can realistically be met in the current market environment. She pointed to insurance requirements as one example, noting that crypto-focused businesses may struggle to secure cybersecurity and directors’ liability coverage from local providers.

That concern resurfaced later in the discussion when panelists questioned whether firms would be able to satisfy licensing conditions if banks and insurers remain cautious about servicing virtual asset businesses.

Bill Okello, Chief Legal Officer at Steakhouse Financial and Director at the Virtual Assets Chamber, said some financial institutions are still relying on older cautionary guidance issued during earlier stages of Kenya’s crypto debate. He argued that implementation could become uneven unless regulators provide clearer direction on how licensed virtual asset firms should be treated by banks and insurers.

Panelists also described a growing convergence between crypto regulation and traditional financial supervision. Several speakers noted that the proposed rules increasingly resemble banking and payments regulation in areas such as governance, reserve segregation, reporting obligations, and capital requirements.

Thomas Louis Abira, Founding Partner at Thomas Louis Advocates, said the scale of the proposed compliance framework may force digital asset companies to build dedicated regulatory and legal teams similar to those found in banks and telecommunications firms. He noted that some licensing categories could require continuous compliance monitoring and significant capitalization thresholds.

Stablecoins emerged as one of the most contested subjects during the session.

Representatives from Tether and Yellow Card said regulators are still working through how global stablecoin issuers, local exchanges, liquidity providers, wallet operators, and payment intermediaries should fit into Kenya’s licensing structure.

Mabuti Mutua, Head of Regulatory Affairs and Licensing Africa at Tether, said much of the current engagement with regulators involves explaining how stablecoin infrastructure operates across multiple markets. He described ongoing discussions around transaction flows, intermediary exposure, and consumer protection obligations as authorities attempt to map existing crypto operations onto more traditional financial oversight structures.

The discussion also exposed a broader challenge facing digital asset markets across Africa. Regulators are attempting to formalize businesses that operate across borders, while most legal and financial frameworks remain nationally structured.

That tension surfaced repeatedly during audience discussions around licensing categories, enforcement coordination, and cross-border payment operations.

Despite the concerns raised during the session, panelists said engagement between regulators and industry players has improved compared to earlier years, when many crypto firms struggled to access policymakers or financial authorities.

Speakers said consultations during drafting of the VASP framework helped shape parts of the current law, although several recommendations from industry participants were not ultimately adopted.

The next phase now depends less on whether Kenya will regulate digital assets, and more on how those rules will function once enforcement and implementation begin.

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