Published: July 9, 2025, 08:08 (EAT)
The diagram, taken on October 24, 2023, shows representations of Bitcoin cryptocurrency and price lists.
Kenya is again setting the pace of Africa’s digital finance innovation. Based on M-PESA’s runaway success, the country’s updated 2025 Virtual Asset Service Provider (VASP) bill is poised to reshape the future of cryptocurrency regulation and use.
By providing a principled regulatory framework, buildings bridge compliance innovation and unlock key opportunities for fintech players, small businesses and diaspora communities.
Below are five important ways the VASP bill will transform crypto payments in Kenya.
1. Create clarity of regulations and build investor trust
The VASP bill presents Kenya’s first complete regulatory framework for cryptocurrency service providers. This includes formal licensing by the Capital Markets Bureau and the Kenya Central Bank, minimum capital requirements, and operating standards that will help legalize virtual asset services.
This level of regulatory certainty helps eliminate the grey area that previously slowed innovation, or traditional financial institutions who were hesitant to engage in cryptocurrency and other virtual assets.
For digital payment providers, this clarity provides a defined path to broaden your regulated, compliant services.
Furthermore, Kenya’s regulatory clarity can enhance its appeal as a crypto hub, reflecting the global trends that jurisdictions like Dubai and Singapore have become prominent through similar regulatory moves.
2. Reduce remittance costs
Transfers are the lifeline of millions of Kenya households. In 2023 alone, the country received more than $4 billion in diaspora remittances. However, depending on your provider, it is still expensive to send it home at a rate ranging from 5% to 15%.
Cryptocurrency can reduce these costs to less than 2% when deployed responsibly. In other words, the VASP bill could stimulate better regulation, innovation, and lead to cheaper, faster and safer ways to exchange cryptocurrency and transfer platforms.
With clear guidelines in place, we hope that more service providers will allow diaspora users to transfer funds for digital assets, and to allow a seamless transition to Kenyan Shilling through approved exchanges, and a direct withdrawal to M-PESA wallets.
This interoperability between cryptocurrency and mobile money dramatically improves financial access and efficiency.
3. Money Laundering Strengthening of anti-money laundering
One of the most forward-looking aspects of the VASP bill is its focus on compliance. The Act is consistent with global best practices by requiring robust knowledge customer (KYC) and money laundering anti-money laundering (AML) procedures, including the Financial Conduct Task Force on Digital Assets (FATF) guidance.
This is further strengthened by Kenya’s recently established AML framework. This broadens the scope of agency reporting, strengthens enforcement rights and demonstrates the government’s firm attitude towards combating financial crime across both traditional financial and digital finance ecosystems.
Therefore, licensed VASPs must enhance customer due diligence, maintain detailed transaction records, and monitor suspicious activity.
These are not just check boxes, but are essential for creating a reliable and secure digital finance ecosystem that regulators, banks and users can trust.
These enhanced frameworks allow for better integration with traditional banking services, deeper collaboration with traditional financial institutions and regulatory authorities, and strengthen the bridge between cryptocurrency and the wider economy.
4. Enable SME integration
SMEs account for more than 90% of Kenyan businesses, but face many challenges, including many payment processing fees and wide access to international markets.
The VASP bill creates opportunities for local businesses to accept digital assets payments, providing faster, cheaper alternatives to cards and wire transfers.
Additionally, small and medium-sized businesses will be able to sell to global customers without the need for complex cross-border banks.
For example, Nairobi-based artisans can receive cryptocurrency payments from New York buyers and convert them to Kenyan Shillings through licensed Kenyan exchanges without delay or bank fees.
The bill also ensures that the platform provides educational support by providing clear information on risk, benefits and best practices and allowing small business owners to make informed decisions about cryptocurrency payment integration.
5. Strengthening cross-border trade
Kenya plays a key role as a trade gateway for East Africa, but cross-border payments remain slow and expensive.
Once the VASP bill is implemented, regulated cryptocurrency platforms can support real-time cross-border payments at low cost. For importers and exporters, this means faster settlements, better cash flows and lower transaction fees.
More advanced use cases may also be feasible, such as escrow services with Smart Contract. Imagine a scenario in which a small Kenyan exporter is automatically paid at the moment when the funds are kept securely in escrow up to that point. This type of innovation reduces risk and drives new trade relations, particularly within the AFCFTA framework.
Major Africa’s digital finance revolution
The VASP bill represents Kenya’s strategic decision to lead the evolution of Africa’s cryptocurrency through principle regulations.
By creating a framework that balances innovation and compliance, Kenya was able to position itself as the continental digital finance capital, addressing legitimate concerns about financial stability and consumer protection.
This transformation is based on the success of Kenya’s mobile money and leverages the same principles of financial inclusion and innovation that have influenced M-PESA globally.
As digital assets become a major part of our financial lives, this law provides a thoughtful and balanced foundation for the future.
And for millions of Kenyans, whether they run a business, come home, or explore new ways to manage their money, their future looks more inclusive than ever.
Author Beth Moni is the commercial vice president of Onafrik
