Kenya Eases Stablecoin Rules, Boosts Local Investment

Kenya has revised its regulations on virtual currencies, lowering the minimum paid-up capital required for stablecoin issuers from Sh500 million to Sh300 million. The new rules aim to make licensing more attractive for local and foreign operators while maintaining strict regulatory controls.

The country's virtual currency market was estimated to close at $400 billion in 2024, nearly doubling over the past two years. Kenya ranked fifth globally in crypto adoption, with stablecoins accounting for a significant share of transactions due to their use in cross-border payments and as a hedge against currency volatility.

The revised regulations give the Central Bank of Kenya (CBK) broad powers over stablecoin issuers and other virtual asset service providers. The CBK can order licensed stablecoin issuers to suspend issuance or redemption, direct exchanges and wallet providers to restrict or delist tokens, and force locally licensed platforms to stop offering offshore-issued stablecoins.

The framework retains stringent reserve requirements, including a 30% minimum in segregated trust accounts and eligible assets within Kenya. The licensing fee for stablecoin issuers is Sh2 million, four times the amount charged to wallet providers. Directors, senior executives, and external auditors may also be held personally liable for investor losses resulting from misleading information.