Kenya’s Draft Crypto Regulations Spark Industry Concerns
- The draft Virtual Asset Service Providers (VASP) Regulations, prepared by the National Treasury, require firms to hold significant paid-up capital before obtaining licenses.
- Stablecoin issuers would need up to $3.86 million in capital, while other service providers face lower but substantial requirements.
- Firms must ring-fence client funds and submit to oversight by the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA).
- The Virtual Asset Association of Kenya (VAAK), representing about 50 firms, warns these demands could exclude startups from the formal market.
- Public feedback on the regulations is open until April 10, after which final rules will be gazetted.
Kenyan authorities argue that these regulations are necessary to protect investors and stabilize a rapidly growing but largely unregulated crypto sector. However, industry groups fear that high capital thresholds may push smaller startups out of the market.
The proposed regulations could potentially concentrate market activity among a few well-funded players, undermining consumer protection goals by driving users toward offshore platforms. (Source)
