Kenyan Crypto Startups Eye South Africa and Mauritius Amid Steep Capital Rules
Kenyan cryptocurrency startups are considering relocating their businesses to more accommodating countries due to steep capital requirements in Kenya. The minimum paid-up capital for virtual asset service providers (VASPs) has been set at Sh100 million, with other categories having even lower thresholds. Startups argue that these high fixed thresholds risk shutting out early-stage firms that have yet to attract significant investor funding or clientele.
Eric Michubu, founder of Taran App, a platform enabling crypto users to exchange stablecoins and local currencies in East Africa, said his startup had already applied for licensing but is no longer eligible unless it meets the new capital threshold. 'It's very difficult to raise funds; the process takes time, so many local builders may not meet the deadline,' Michubu stated.
The regulations were intended to ensure that licensed VASPs have sufficient financial capacity to operate and protect customers. However, startups argue that a tiered capital requirement based on the scale of operations and age of companies would be more suitable for early-stage firms. South Africa's regulatory regime does not prescribe specific fixed capital requirements for VASPs, while Mauritius has lower minimum capital thresholds than Kenya.