Kenya Cracks Down on Crypto: Strict Licensing and Stablecoin Ban

Kenya has introduced a comprehensive framework for regulating virtual assets, including cryptocurrencies and stablecoins. The Virtual Asset Service Providers (VASP) Regulations 2026 were published in the Kenya Gazette Supplement No. 185 under Legal Notice No. 134 on July 24, 2026.

The regulations aim to protect retail investors while ensuring compliance with global anti-money laundering (AML) standards. The Central Bank of Kenya (CBK) assumes authority over stablecoins and services that facilitate virtual-asset-to-fiat conversions, while the Capital Markets Authority (CMA) will regulate cryptocurrency exchanges and other related activities.

One key provision in the regulations is the ban on interest payments to token holders by stablecoin issuers. This move effectively dismantles popular yield-farming models that attracted significant capital. The minimum paid-up capital requirement for stablecoin issuers has been lowered from KES 500 million to KES 300 million, making it easier for new entrants to join the market.

The regulations also apply to offshore platforms operating in Kenya, which must submit to local licensing and conform to local data reporting requirements. Existing Virtual Asset Service Providers have until November 4, 2026, to secure formal licensing or face operational bans and financial penalties.