Kenya is poised to introduce a landmark legal framework for digital assets following the recent passage of the Virtual Asset Service Providers (VASP) Bill, 2025, by its Parliament. The legislation, which successfully completed its third reading, now awaits presidential assent from President William Ruto to be enacted into law. This development could establish Kenya as one of Africa’s pioneering nations with a comprehensive and clear regulatory guide for virtual assets, setting a precedent for the continent.

Originally introduced in 2024, the VASP Bill outlines a dual regulatory approach, designating the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) as joint oversight bodies for digital assets. Furthermore, the Treasury Cabinet Secretary will be empowered to formulate detailed rules encompassing critical areas such as stablecoins, the tokenization of real-world assets, operational standards for trading platforms, stringent capital and solvency requirements, and robust anti-money laundering (AML) compliance protocols. The bill's journey through Parliament involved extensive committee-stage debates and public consultations, ensuring a thorough legislative process.

Attorney General Dorcas Oduor is currently finalizing the draft for presidential review. Lawmakers have indicated that the version approved in the third reading incorporates enhanced compliance and licensing clauses, although the specific updated text has not yet been made public. The enactment of this legislation is expected to position Kenya with one of Africa's most structured virtual-asset regimes, characterized by transparent capital, solvency, and vital consumer-protection provisions for service providers operating within its borders.

Crucially, the bill will establish a formal licensing pathway for both local and international cryptocurrency startups already active in the Kenyan market, including prominent players like Luno, Busha, KotaniPay, Fonbnk, Swypt, and Binance. Chebet Kipingor, business operations manager for Busha Kenya, a subsidiary of a Nigerian crypto startup, remarked on the significance: "With Parliament’s passage of the VASP Bill, Kenya is one signature away from making regulatory history. It’s a signal that Africa’s most innovative economy is ready to balance innovation with consumer protection, and that progress, not fear, will guide our digital future."

However, the practical impact on these startups will largely hinge on the forthcoming regulatory benchmarks and capital thresholds. The timing of this legislative push also carries broader implications for Kenya's financial landscape. The government is under considerable pressure to bolster its financial oversight mechanisms, partly driven by efforts to be removed from the Financial Action Task Force (FATF) greylist and to meet specific revenue-raising and fiscal targets linked to its IMF extended fund facility (EFF), which was cancelled in March. The true determinant of Kenya's success as a preferred hub for digital asset service providers in Africa will lie in the detailed sub-regulations issued by the Treasury, particularly how it defines capital adequacy, custody procedures, and disclosure requirements for startups. President Ruto is anticipated to receive the final bill within the coming weeks, paving the way for Kenya's inaugural comprehensive cryptocurrency law.