Kenya is moving to bring its fast-growing crypto sector under closer scrutiny, with new draft rules that set out strict requirements for stablecoin issuers and tokenised asset platforms.
The proposals, released by the National Treasury on March 19, introduce detailed standards around reserves, disclosures, and operational controls for firms issuing stablecoins digital currencies pegged to fiat or tokenised real-world assets (RWAs), such as property or debt traded in digital form.
At their core, the rules aim to formalise oversight of virtual asset businesses and help Kenya exit the Financial Action Task Force (FATF) grey list. Regulators are also responding to concerns that lightly regulated crypto activity could weaken anti-money-laundering protections in a market where usage is already high.
Under the draft framework, stablecoin issuers would be required to fully back their tokens with local fiat reserves held in high-quality liquid assets, such as cash or bank deposits. These funds must be kept separate from company finances, held with approved custodians, and available for immediate redemption.
Firms would also need to meet steep capital thresholds: a minimum paid-up capital of KES 500 million (about $3.85 million) and at least KES 100 million ($771,000) in core or liquid capital. Alternatively, they must hold capital equal to 100% of their liabilities for at least 30 days whichever is higher.
The rules go further. Stablecoins must be redeemable at face value on demand, and issuers are barred from offering any form of yield direct or indirect, a practice that has become common in global crypto markets.
Regulatory oversight would be split. Stablecoins used for payments would fall under the Central Bank of Kenya, while tokenised RWAs that qualify as investment products would be regulated by the Capital Markets Authority (CMA).
Beyond stablecoins, the draft introduces a disclosure regime for token offerings that mirrors traditional capital markets. Projects would need to publish detailed white papers outlining how they operate, who is behind them, how funds are managed, and how underlying assets are valued. Risks must be clearly stated, along with investor refund rights.
Company boards would be held accountable for the accuracy of these disclosures, with ongoing filing requirements and mandatory warnings that such investments are not protected by compensation schemes.
Platforms facilitating token sales would also face their own capital requirements, including a minimum paid-up capital of KES 200 million ($1.5 million) and at least KES 40 million ($309,000) in liquid capital, or 8% of liabilities.
Industry players say the bar may be too high.
Robert Salim, CEO of the Virtual Asset Association of Kenya (VAAK), warned that the framework risks treating even small token projects like full-scale public offerings.
“Kenya risks recreating an IPO-level regime for even modest token raises,” he said, noting that the cost of compliance from legal reviews to ongoing disclosures could be out of reach for early-stage projects.
The same concern applies to stablecoins. Issuers would need to fund regular proof-of-reserves checks, annual audits, and robust custody systems, in addition to licensing costs.
According to Salim, most token raises in Kenya fall between KES 50 million and KES 100 million ($386,000–$771,000), making the proposed requirements disproportionately heavy. He warned that smaller projects could be pushed offshore or into informal markets, reducing innovation in areas like decentralised finance, supply-chain tokenisation, and local stablecoin pilots.
The framework, he argues, is “deliberately bank-like,” favouring large, well-capitalised players such as commercial banks or international firms.
If implemented as proposed, Kenya may end up with only a handful of licensed stablecoins likely bank-issued shilling tokens or global dollar-backed coins adapted for the local market.
For now, the Treasury is inviting public feedback, with submissions open until April 10. Industry groups like VAAK are pushing for a tiered approach that would apply lighter disclosure rules to smaller projects while maintaining stricter standards for large, retail-facing offerings.
How regulators respond could shape the future of Kenya’s crypto market determining whether it becomes a tightly controlled space dominated by major players, or one that still leaves room for smaller innovators to experiment.