Kenya’s financial regulators have called for stronger safeguards for consumers and more rigorous oversight of digital financial services following the implementation of the Virtual Asset Service Provider (VASP) Act. The law brings cryptocurrency exchanges, wallet providers, and other digital asset firms under formal regulatory supervision for the first time.
The statement came from the 16th Annual Board Retreat of the Joint Financial Sector Regulators Forum, which brought together major agencies including the Central Bank of Kenya (CBK), Capital Markets Authority (CMA), Insurance Regulatory Authority (IRA), Retirement Benefits Authority (RBA), Sacco Societies Regulatory Authority (SASRA), and the Kenya Deposit Insurance Corporation (KDIC).
Regulators acknowledged that emerging technologies such as digital lending platforms, artificial intelligence-driven services, and virtual assets have increased access to financial services. At the same time, they noted that these innovations carry new risks, particularly around consumer protection, financial stability, and operational resilience.
The VASP Act now establishes clear rules for anti-money laundering (AML), counter-terrorism financing (CFT), and counter-proliferation financing (CPF) compliance for all digital asset service providers. Under the framework, providers must register with the relevant regulator, maintain robust reporting systems, and ensure operational continuity to prevent disruptions that could affect customers.
The regulators also highlighted the concentration risk posed by dependence on a limited number of technology vendors. If one provider fails, multiple financial institutions and their clients could be affected. This measure underscores the importance of operational resilience and secure systems in digital finance.
Kenya remains on the Financial Action Task Force (FATF) grey list, and the regulators emphasised that consistent enforcement of these rules is essential to meet international standards. The new framework aims to integrate digital assets into Kenya’s financial system while maintaining structured oversight.
By implementing these regulations, Kenya is formally bringing cryptocurrency and digital finance into a regulated environment that prioritises compliance, consumer protection, and system stability.
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