Kenya's crypto exchanges could face tougher rules on sharing customer data

Kenyans transferred a record KSh740 billion ($5.7 billion) worth of cryptocurrencies in the year to June 2026, expanding a market increasingly used for cross-border payments, investments and the movement of money between countries.

The scale of those transactions is drawing attention to a regulatory challenge: identifying the people behind digital asset transfers when money moves between different cryptocurrency platforms.

The International Monetary Fund (IMF) wants Kenya to address this gap by incorporating the Financial Action Task Force’s (FATF) Travel Rule into its virtual asset regulations or another appropriate legal instrument without delay.

The requirement would compel virtual asset service providers (VASPs), including cryptocurrency exchanges, to collect and transmit identifying information about the people sending and receiving digital assets when they process qualifying transfers.

The proposal would add a new layer to Kenya’s cryptocurrency oversight. While existing rules require service providers to identify customers and maintain transaction records, the Travel Rule would require them to exchange prescribed customer information with other platforms involved in a transfer.

Kenya’s growing crypto market presents a tracking challenge

Analysis by Chainalysis, a New York-based blockchain data platform, found that Kenya’s cryptocurrency transaction volumes reached KSh740 billion ($5.7 billion) in the year to June 2026. The growth placed the country third among Africa’s largest crypto economies, behind South Africa and Nigeria and ahead of Ethiopia.

Digital assets are increasingly used for cross-border payments, remittances, investments and payments for goods and services. Stablecoins, whose value is pegged to assets such as the US dollar, have become particularly important because they offer a way to transfer value without the price volatility associated with cryptocurrencies such as Bitcoin.

However, the movement of digital assets across platforms can make it difficult for financial investigators to connect transactions with identifiable individuals. Although public blockchains record transfers, wallet addresses do not automatically disclose the identities of the people controlling them.

This distinction has become important in investigations involving cryptocurrency wallets, exchanges and intermediaries. Kenya’s peer-to-peer market also presents an additional challenge because individuals can transact directly without relying on a conventional exchange for every transfer.

The IMF has identified the prevalence of peer-to-peer transactions in Kenya as a concern, with market participants linking some of this activity to scams.

What the IMF wants Kenya to change

The Travel Rule is an international anti-money laundering and counter-terrorism financing standard developed by the FATF, the global watchdog responsible for setting standards to combat money laundering and terrorist financing.

It requires VASPs to collect, verify and securely retain information identifying the originator and beneficiary of qualifying digital asset transfers. The originating service provider must transmit the prescribed information to the receiving provider during or before the transfer.

For example, when a customer sends cryptocurrency from one exchange to another, the sending platform would have to provide information identifying the sender to the receiving platform. The receiving platform would also need to obtain information identifying the beneficiary.

The information can help service providers screen transactions against sanctions lists, assess potential financial crime risks and identify transfers that warrant further investigation.

Under the requirements described in the proposal, information about the sender would include their full name, account reference and either their physical address or national identification number, together with the wallet address involved in the transfer.

The receiving platform would obtain the beneficiary’s name, account reference and wallet address. These details would help link the movement of digital assets to identifiable customers at either end of the transaction.

The requirement is not simply an instruction for exchanges to submit every customer’s details directly to the government. Its central mechanism is the exchange of prescribed information between the VASPs involved in a transfer. Kenya’s Financial Reporting Centre (FRC), the country’s financial intelligence unit, would use information available through its reporting, supervisory and investigative framework to support the identification and investigation of suspicious activity.

Kenya already requires crypto firms to keep customer records

Kenya’s existing virtual asset framework already places obligations on service providers to identify customers and maintain records of their activities.

These records include information about cryptocurrency purchases and sales, transaction values and profits. Such information can also support tax assessment by the Kenya Revenue Authority (KRA), which applies a 3% tax on the transfer or exchange of digital assets, collected and remitted by the relevant platforms.

The difference is that retaining customer information does not necessarily mean that a platform must transmit that information to another service provider whenever a customer sends digital assets to an external exchange.

The Travel Rule would introduce that additional obligation. It would make information-sharing part of the transaction process, allowing the receiving platform to connect incoming digital assets with an identifiable originator rather than relying only on a wallet address.

This would also give authorities a more structured way to trace the movement of digital assets across service providers when investigating suspected money laundering, fraud or terrorist financing.

The IMF wants the requirement incorporated into Kenya’s recently published VASP Regulations or another appropriate legal instrument. Its recommendation comes as the country remains under increased international scrutiny over weaknesses in its anti-money laundering and counter-terrorism financing controls.

Kenya has been on the FATF grey list since February 2024. The absence of a legal requirement for VASPs to exchange information about the originators and beneficiaries of transfers represents a gap in the country’s implementation of international standards.

Crypto investigations show why transaction tracing matters

Kenyan investigations involving digital assets have already illustrated the difficulty of following money through different financial channels.

In July 2026, proceedings involving an investigation by the Assets Recovery Agency brought attention to the use of shell companies, bank accounts, remittance services and Binance wallets holding USDT in an alleged money laundering network. The case involved preservation orders covering approximately KSh115 million in assets, including a cryptocurrency wallet holding more than 751,000 USDT.

A separate case involving alleged payroll fraud at Equity Bank also exposed the challenge of tracing funds across conventional banking and cryptocurrency platforms. The High Court proceedings involved preservation of bank accounts holding KSh303.2 million and cryptocurrency assets associated with the defendants.

These cases do not establish that cryptocurrency activity is inherently illicit. They illustrate why investigators need to connect digital asset movements with the individuals and entities involved, particularly when funds pass through multiple platforms and financial intermediaries.

The Travel Rule is intended to improve that connection by making the exchange of customer information a formal obligation for regulated service providers.

How other markets apply the Travel Rule

Countries have adopted different approaches to implementing the FATF requirement, particularly when determining the transaction values at which information-sharing obligations apply.

The FATF baseline calls for the collection and transmission of originator and beneficiary information for transfers above US$1,000 or €1,000. Some jurisdictions have adopted stricter requirements by removing the minimum value threshold.

The European Union applies its information requirements to crypto transfers regardless of their value. The United Kingdom and Japan also apply a zero-threshold approach, requiring the relevant information to accompany transfers without a minimum transaction amount.

The United States uses a higher threshold of US$3,000 for its applicable information-sharing requirements. South Korea requires domestic VASPs to exchange verified customer information through integrated messaging solutions before executing transfers of at least one million Korean won.

These differences show that implementing the international standard involves decisions about thresholds, the information platforms must exchange and the systems they need to use to transmit it securely.

Kenya will have to determine how the requirement applies to its own market, including whether it will follow the FATF baseline or adopt a lower threshold. The design will also matter for a market where peer-to-peer transactions and transfers involving self-hosted wallets complicate the identification of counterparties.

The IMF’s recommendation therefore goes beyond requiring cryptocurrency exchanges to collect more customer details. It seeks to make identity information travel alongside digital assets when those assets move between regulated service providers, closing a gap between customer identification and the monitoring of transactions across platforms.

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