Kenya Bans Interest Payments on Stablecoins in New Virtual Asset Regulations

The Kenyan government has introduced a new regulation that prohibits stablecoin issuers and licensed virtual asset service providers from paying interest or any other form of remuneration linked to how long someone holds a stablecoin. This provision is part of Kenya's new virtual asset regulations, which aim to establish the role stablecoins will play within the country's financial system.

The regulation defines stablecoins as payment instruments while preventing them from evolving into products that resemble bank deposits or savings accounts. The Treasury has focused on preventing stablecoins from competing directly with deposit accounts by offering returns similar to a savings account.

The interest ban reflects a broader financial policy objective that runs through Kenya's crypto regulations, which include capital requirements, liquidity standards, governance rules, and reserve obligations that place stablecoin issuers under supervision closer to that applied to other financial institutions.