When cryptocurrencies first entered Kenya in 2013, they stirred more suspicion than excitement. Traditional banks kept their distance. The Central Bank of Kenya (CBK) had issued a stern warning against their use in 2015, citing risks like fraud, volatility and the absence of regulation. But while the financial establishment hesitated, crypto enthusiasts forged ahead, turning to peer-to-peer networks to keep the momentum alive.
After years of rejection and distaste for virtual assets, the government decided to introduce regulation into the sector to fuel innovation and financial inclusion, which resulted in drafting of Virtual Assets Service Providers (VASP) Bill 2025 which is awaiting the third reading in parliament, spearheaded by Molo MP Kimani Kuria.
The Bill seeks to ensure any entity offering virtual asset services including wallet providers, exchanges, brokers, investment advisers, virtual assets managers, virtual assets tokenization and even crypto miners will be required to obtain a license from Capital Markets Authority (CMA), CBK or the proposed Virtual Assets Regulatory Authority (VARA).
Ease of payment
Tony Olendo, the Chairman of Virtual Assets Chamber of Commerce (VACC) and co-founder of ViFi Labs, a virtual finance company, says the regulation of the virtual assets sector is a step in the right direction in realization of benefits that come with crypto. He says many people look at crypto from a currency speculation perspective overlooking the immense opportunities that crypto technology can bring to the economy. He says stablecoins for instance can solve the problem of dollar shortages because it’s widely accepted.
“Speculation is catchy, that is what makes headlines and nobody wants to talk about stablecoins which are digital dollars which have surpassed Visa Card and MasterCard volumes. That is a real practical use case. People in other African countries are using crypto to be able to buy goods from China and reducing transaction time from three days to 30 seconds,” Orlando says, adding that with crypto wallets, remittance costs will be about two per cent, unlike traditional financial institutions which charge between five and 10 per cent.
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Attracting investments
VACC boss is confident that crypto regulation in Kenya will give rise to startups seeking to tap into block chain technology to solve day-to-day problems and attract investors who might have shied away from investing in the sector which was unregulated.
“We’ll see many startups emerging and acquiring licenses. With a license, you gain the ability to interact with banks and users. Investors will begin to view Kenya in a very different light and that will be a key driver of growth. With incoming regulation, we also expect the traditional financial sector to finally diversify its portfolio and engage with digital assets,” he says.
“We expect to see significant venture capital flowing into the country. I urge the developer community to prepare and start building not just for Kenya, but for the world. Crypto enables global access, and talent is everywhere. This bill presents a major opportunity for Kenyan developers,” he says.
Solving liquidity challenges via tokenization
Olendo says crypto currency will solve liquidity challenges through tokenization. Tokenization allows businesses or individuals to convert real-world assets like real estate, land or even shares into digital tokens that can be sold or traded on blockchain platforms citing how it’s being used in foreign markets.
“Forty-four per cent of Wall Street funds have exposure to crypto, and 10 per cent of their portfolios are in crypto. But none of the funds in Kenya have any crypto exposure. Our financial sector is being left behind due to a lack of regulation,” he observes.
“With crypto, people are tokenizing assets and the key driver is liquidity because crypto doesn’t sleep. You can trade 24 hours a day for whatever volume you want,” VACC boss adds.
