Kenya’s recent passage of the Virtual Asset Service Providers (VASP) Act in October 2025 marks a significant shift for the country, moving cryptocurrency from a regulatory grey area into a supervised marketplace. This development, however, is facing an immediate test with the recent appearance of unlicensed Bitcoin ATMs in Nairobi’s major shopping malls, highlighting the challenges of implementation. As Bitcoin’s price navigates a crucial technical juncture, this blend of emerging market regulation and real-world adoption creates a complex backdrop for traders and institutions.
A Regulatory Framework Takes Shape in Kenya
Kenya’s VASP Act, which received presidential assent on October 15, 2025, establishes the nation’s first comprehensive regulatory framework for digital assets. The law mandates that all virtual asset service providers, including exchanges and custodial wallet services, must be licensed and adhere to strict anti-money laundering and consumer protection rules. The oversight is shared between the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA).
A key motivation behind this legislation is to protect consumers by requiring platforms to segregate client assets and undergo independent audits, thereby reducing the risk of customers losing their funds if a platform fails. The government has also shifted the tax treatment, replacing a 3% digital asset tax with a 10% excise duty on platform fees, a change that could be more favorable for long-term holders.
The Challenge of Implementation
Despite the new law coming into effect on November 4, 2025, a regulatory gap has quickly become apparent. The Central Bank of Kenya and the Capital Markets Authority issued a joint notice on November 18, clarifying that no companies have yet been licensed as VASPs and that operating without approval is illegal. This warning came just as “Bankless Bitcoin” ATMs were installed in prominent locations like Two Rivers Mall, offering cash-to-Bitcoin services to the public.
This situation creates a dilemma. These ATMs provide visible, convenient access to cryptocurrency, yet they operate in a legal vacuum where users lack the consumer protections the new law is designed to provide. It underscores the tension between rapid technological adoption and the slower pace of establishing a fully functional regulatory system.
Interestingly, Bitcoin is not new to Kenya. In lower-income neighborhoods like Kibera’s Soweto West, grassroots adoption has been growing since 2022 through initiatives that pay small Bitcoin grants to garbage collectors. This demonstrates a pre-existing, organic demand for digital assets that the formal regulatory framework is now trying to accommodate.
A Glimpse of the Future
The successful implementation of Kenya’s VASP Act could serve as a model for the region, positioning the country as a regulated crypto hub in East Africa. For this to happen, the National Treasury must finalize the detailed implementation regulations so that the licensing process can begin. The ultimate goal is a market that balances innovation with strong consumer safeguards, allowing Kenya to harness the potential benefits of digital assets—such as supporting cross-border trade and micro-commerce—without compromising financial stability.
