The government has stepped up efforts to bring order to the fast-growing virtual assets sector, with the Capital Markets Authority (CMA) spearheading public participation on the draft Virtual Asset Service Providers Regulations.
Speaking during a public participation forum, CMA Senior Manager for Policy and Regulatory Framework, Jairus Muaka, said the regulations are intended to operationalize the Virtual Asset Service Providers Act, which was enacted in November last year.
Muaka noted that the Act received presidential assent on November 15 and became effective soon after, necessitating the development of supporting regulations to guide implementation.
“To operationalize the Act, the government, through the National Treasury and a multi-agency task force, developed draft regulations which have already undergone stakeholder engagement. We are now at the stage of public participation to gather views from Kenyans,” he said.
He explained that virtual assets—commonly referred to as cryptocurrencies—are already widely used in the country, but most service providers operate outside a regulated framework, noting lack of regulation has exposed many Kenyans to risks, particularly fraud and scams, with young people being the most affected.
“We already have individuals and entities offering these services, but they are not in a licensed environment. This creates exposure for consumers, especially in cases of scams where there is no protection,” he said.
He added that public forums held in various parts of the country, including Machakos and Mombasa, revealed growing concern over fraudulent schemes targeting youth in the crypto space. The proposed regulations will require all Virtual Asset Service Providers to obtain licenses and comply with strict operational standards.
Muaka said regulatory oversight will be shared between the Central Bank of Kenya (CBK) and the CMA, depending on the nature of services offered, to ensure a coordinated and effective framework.
“The aim is to ensure that anyone providing these services is licensed and adheres to the obligations set out. This will enable us to take action against those who defraud Kenyans,” he said.
He emphasized that the regulations will enhance consumer protection, promote transparency, and support the safe growth of the digital asset market in Kenya.
By Mutai Kipng’etich
