A. Summary of the law
The Virtual Asset Service Providers Act, which received Presidential assent on 15th October 2025 and came into force on 4th November 2025, sets out the regulatory framework for the activities of virtual asset service providers (VASPs) in and from Kenya. It provides for licensing requirements, expands the scope of regulated virtual asset activities, and integrates anti-money laundering provisions to enhance consumer protection and integrity of virtual asset transactions.

B. Who is affected?
The legislation impacts the following actors: 

1. Registered businesses which plan to enter or are entering the virtual asset market in Kenya.
2. Virtual asset service providers whose activities are regulated and are subject to the licensing and operational requirements in the Act.
3. Persons engaging in the following types of virtual asset activities:

1. Virtual asset exchanges.
2. Virtual asset wallet provider.
3. Virtual asset payment processor.
4. Virtual asset broker.
5. Virtual asset investment advisor.
6. Virtual asset manager.
7. Virtual asset offering promoter.

C. Required actions
The Act outlines the following concrete compliance steps:

1. Licensing: Virtual asset service providers must apply for and obtain licensing from regulatory authorities (such as the Central Bank of Kenya and Capital Markets Authority)
2. Engagement only in permissible business activities. Licensed businesses must only engage in permitted virtual asset activities.
3. Enhanced procedures which enable licensed providers to establish enhanced anti-money laundering and Know Your Customer (KYC) procedures tailored to the relevant virtual asset transactions.
4. Compliance with various regulatory requirements. The Act provides robust institutional mechanisms which ensure licensed businesses meet prescribed reporting obligations (including financial reporting), ensure compliance with prior-approval processes under the law; ensure operational competence; and implement prescribed standards of solvency, insurance, data protection, cybersecurity, integrity, and prudence.
5. Adjustment of internal business policies to reflect prohibitions on mixer or tumbler services as well as anonymity-enhancing services.
6. Monitoring the provisions of the new law to ensure existing virtual asset service providers comply with the requirements within one year from the date of commencement. 

D. Practical impact
The law represents a change in the legal landscape in that: 

1. It is the first framework for regulating a wide range of virtual asset activities in Kenya.

2. It sets requirements and procedures for licensing virtual asset service providers, as well as approval of virtual asset offerings in Kenya. 

3. It designates the Capital Markets Authority and the Central Bank of Kenya as primary regulatory authorities which licence, monitor, and enforce the standards set by it. The authorities regulate different activities as specified in the First Schedule to the Act.

4. It sets applicable standards for regulating illicit financial flows which could potentially emanate from virtual asset transactions. It does this by setting stringent authorization requirements and controls.

5. It introduces consequential amendments to some existing laws. It specifically amends sections of The Proceeds of Crime and Anti-Money Laundering Act, The Capital Markets Act, The Central Bank of Kenya Act, and The National Payment System Act. 

“Kenya steps boldly into the future of financial technology with new rules and standards for regulating the virtual asset ecosystem.”

E. Effective dates and next steps 

1. Commencement
The Act received Presidential assent on 15th October 2025. The official commencement date was 4th November 2025.

2. Waiting period
Existing virtual asset providers have a one-year grace period to meet the licensing and operational requirements introduced by the Act.

3. Transitional provisions to take note of
Besides the one-year grace period, there are no other transitional provisions to note.

4. Phased compliance requirements, if any
Enforcement is expected to apply uniformly from 4th November 2025 for new entrants into Kenya’s virtual asset market.