Treasury bars early sale of crypto licenses under new regulations
New rules require virtual asset firms to launch within 12 months and operate for three years before transferring licenses.
NAIROBI – The National Treasury has introduced new regulations barring cryptocurrency firms from selling or transferring operating licenses during their first three years of business, in a move aimed at curbing speculation and strengthening oversight of the country’s fast-growing virtual asset sector.
The rules, contained in the Virtual Asset Service Providers (VASP) Regulations, 2026, require licensed operators to commence business within 12 months of receiving approval or risk losing their licenses.
The regulations, published under Legal Notice No. 134, operationalize the Virtual Asset Service Providers Act, 2025, and establish a comprehensive licensing and supervisory framework for cryptocurrency exchanges, digital wallet providers and other virtual asset businesses.
Under the framework, the Central Bank of Kenya will supervise virtual asset services involving fiat currency and stablecoins, while the Capital Markets Authority will regulate cryptocurrency exchanges and other investment-related virtual asset services.
Existing virtual asset service providers have until Nov. 4, 2026, to comply with the new licensing requirements.
The Treasury said the restrictions are intended to discourage speculative acquisition of licenses by individuals or companies seeking to resell them rather than build operational businesses.
The rules dictate that a virtual asset service provider may not transfer or assign its license until it has operated continuously for at least three years, effectively preventing the emergence of a secondary market in operating permits.
The regulations also introduce a “use-it-or-lose-it” requirement under which firms must begin operations within one year of obtaining approval, allowing regulators to revoke licences issued to businesses that fail to launch.
These statutory safeguards form part of a broader regulatory framework intended to bring Kenya’s virtual asset industry in line with international standards on anti-money laundering and counter-terrorism financing.
Licensed firms will be required to comply with anti-money laundering and customer due diligence rules, maintain transaction records for at least seven years, report cybersecurity incidents within seven working days and comply with the Data Protection Act.
The regulations also limit any individual shareholder to one-third of the voting rights or ownership in a licensed virtual asset exchange or wallet provider unless the shareholder is an approved corporate entity, a measure intended to reduce concentration of ownership and control.
The government has moved to establish a formal legal framework for digital assets after years of rapid growth in cryptocurrency trading without sector-specific regulation. Authorities have said the new regime is intended to encourage legitimate investment while reducing risks associated with fraud, illicit financial flows and unregulated operators.
