Regulatory Alerts2025-01-01
Virtual Asset Service Providers Act, 2025
The Virtual Asset Service Providers Act, 2025, establishes a mandatory licensing and regulatory framework for businesses providing virtual asset services in or from Kenya under the oversight of the Capital Markets Authority and the Central Bank of Kenya. Licensees must adhere to strict operational, financial, and cybersecurity obligations, including robust anti-money laundering and counter-terrorism financing measures, with significant penalties for non-compliance. The Act also mandates comprehensive oversight of virtual asset offerings and provides for investigative powers to ensure market integrity and consumer protection.
The Virtual Asset Service Providers Act, 2025
PART I – PRELIMINARY
- This Act may be cited as the Virtual Asset Service Providers Act, 2025.
[... The document continues with definitions (Section 2), the object of the Act (Section 3), and application (Section 4) ...]
PART II – DESIGNATION OF REGULATORY AUTHORITIES
- The following entities shall be the relevant regulatory authorities for the purposes of this Act— (a) the Capital Markets Authority established under section 5 of the Capital Markets Act; (b) the Central Bank of Kenya established under Article 231(1) of the Constitution; or (c) any other public body established under a written law that the Cabinet Secretary may, by notice in the Kenya Gazette, designate as such.
[... The document proceeds through sections detailing Licensing Requirements (Part III), General Obligations (Part IV), AML/CFT/CPF Prevention (Part V), Virtual Asset Offerings (Part VI), Investigations (Part VII), Enforcement Actions (Part VIII), Miscellaneous Provisions (Part IX), and Delegated Powers (Part X) ...]
FIRST SCHEDULE
VIRTUAL ASSET ACTIVITIES
| Types | Functions | Description | Responsible Relevant Regulatory Authority |
|---|---|---|---|
| Virtual Asset Wallet Provider | Custodial wallet/services | Services provided by a third party for private key management. | Central Bank of Kenya |
| Virtual Asset Exchange | Transfer and conversion services | Digital platform facilitating transfers and exchanges. | Capital Markets Authority |
| Virtual Asset Exchange | Trading, clearing and settlement platforms | Facilitation of sale/trading of virtual assets. | Capital Markets Authority |
| Virtual Asset Payment Processor | Payment gateway | Arranging transactions involving virtual assets and fiat. | Central Bank of Kenya |
| Virtual Asset Broker | Brokerage services | Facilitating exchanges on behalf of clients. | Capital Markets Authority |
| Virtual Assets Investment Advisor | Investment advisory services | Providing advice on virtual assets and offerings. | Capital Markets Authority |
| Virtual Asset Manager | Virtual asset management | Portfolio management on a discretionary basis. | Capital Markets Authority |
| Virtual Asset Offering Provider | Initial Coin Offering | Issuing and selling virtual assets to the public. | Capital Markets Authority |
| Virtual Asset Offering Provider | Virtual Asset Tokenization | Converting real-world assets into digital tokens. | Capital Markets Authority |
| Virtual Asset Offering Provider | Token Issuance Platform | Provision of platform for issuance and secondary trading. | Capital Markets Authority |
| Virtual Asset Offering Provider | Stablecoin Issuance | Creation and management of approved stablecoins. | Central Bank of Kenya |
SECOND SCHEDULE
CONSEQUENTIAL AMENDMENTS
[... Includes amendments to the Proceeds of Crime and Anti-Money Laundering Act, Capital Markets Act, Central Bank of Kenya Act, and National Payment System Act ...]