Kenya Slashes Capital Requirements for Crypto Businesses Amid Licensing Frenzy

Kenya has published its long-awaited Virtual Asset Service Providers Regulations, which outline how to obtain a crypto business license in the country. The regulations were published on July 22 and took effect immediately.

The minimum capital requirements for various types of virtual asset service providers have been significantly reduced compared to the draft regulations proposed in March. For example, the minimum capital requirement for an investment adviser has been removed entirely, while tokenization providers must now hold only KES 10 million instead of the originally proposed KES 200 million.

The regulation also includes changes to licensing fees and renewal requirements. Exchanges will pay a one-time application fee of KES 100,000 and an annual license fee of KES 1 million, down from the previously proposed KES 2 million. Renewals for exchanges are now capped at either KES 500,000 or 0.5% of the previous year's gross revenue, whichever is higher.

The regulations also address issues related to anti-money laundering (AML) and cybersecurity. Licensed firms must hold customer assets separately from their own, with systems and controls in place to protect them from third-party claims. Stablecoin issuers are required to issue and redeem at par value, while white papers for virtual asset offerings require approval from the Central Bank of Kenya 90 days before publication.

The deadline for existing operators to comply with the regulations is November 4. Applicants must be locally incorporated, have a business plan, audited accounts, and proof of funds on hand, among other requirements.