Cryptocurrency has rapidly gained popularity in Kenya, with platforms such as Binance, Yellow Card, and Paxful experiencing increased user adoption. For that reason, this article about cryptocurrency regulation updates in Kenya comes at the right time, especially in 202,5 when the Central Bank of Kenya has issued a directive on how Kenyans should handle digital money.
As more Kenyans buy, sell, and invest in digital assets like Bitcoin and Ethereum, the conversation around regulation has become louder.
The Central Bank of Kenya (CBK) and other regulatory bodies have started to take notice. While crypto isn’t banned, it also isn’t fully regulated, which leaves a grey area for users and businesses.
So, what’s the status of crypto laws in Kenya, and what should you expect going forward?
Let’s break it all down in simple terms.
Why Cryptocurrency Regulation Updates in Kenya Matter Now
Regulating cryptocurrencies is not about banning innovation. It’s about protecting people, stabilizing the economy, and making sure technology is used responsibly.
Here’s why the conversation around crypto regulation is important for Kenya:
- Consumer Protection: Thousands of Kenyans have fallen victim to crypto scams and Ponzi schemes. Clear regulation can help prevent this.
- Preventing Financial Crime: Cryptocurrency can be used for money laundering if not properly regulated. Regulation ensures transparency.
- Economic Stability: Without oversight, large inflows or outflows of crypto can affect financial systems.
- Investor Confidence: Investors—local and foreign—feel safer when there are clear laws in place.
Key Government Bodies Involved
Several government institutions are either directly or indirectly involved in regulating the crypto space.
Central Bank of Kenya (CBK)
The CBK has historically been skeptical of cryptocurrencies. In 2015, it issued a warning to banks about dealing with crypto platforms.
However, in recent years, CBK has begun exploring digital currencies and engaging in regulatory sandboxes to test new financial technologies.
CBK Statements on Crypto
The Central Bank of Kenya (CBK) has issued several official statements and public advisories on cryptocurrencies over the years.
While the CBK hasn’t banned crypto outright, it has consistently expressed caution regarding its use, especially due to risks related to fraud, volatility, and lack of consumer protections.
Here are some key CBK positions and updates:
2015 CBK Warning on Virtual Currencies
In December 2015, CBK issued a public notice warning Kenyans against using digital currencies like Bitcoin, stating that:
“Virtual currencies such as Bitcoin are not legal tender in Kenya and, therefore, no protection exists if the platform that exchanges or holds the virtual currency fails or goes out of business.”
This marked the beginning of CBK’s cautious approach toward crypto.
CBK Governor’s Comments in 2022 and 2023
Dr. Patrick Njoroge, then Governor of CBK, was vocal about his concerns regarding cryptocurrencies. In public forums and interviews, he highlighted:
- The potential use of crypto for illicit transactions.
- The lack of consumer safeguards in crypto trading.
- Crypto’s high volatility makes it unsuitable as a stable store of value.
He also expressed skepticism over private cryptocurrencies replacing national currencies.
CBK’s Regulatory Sandbox and Digital Currency Studies
Despite earlier skepticism, CBK has taken steps toward understanding and testing fintech innovations, including blockchain and crypto-related products:
- In 2021 and beyond, the CBK supported the Capital Markets Authority’s (CMA) sandbox initiative, allowing fintech startups to test crypto-like services under regulatory supervision.
- In 2022, CBK opened consultations on the potential issuance of a Central Bank Digital Currency (CBDC). While not a cryptocurrency like Bitcoin, a CBDC would use similar blockchain technology to issue a digital version of the Kenyan shilling.
In its 2022 CBDC discussion paper, CBK noted:
“The usefulness of cryptocurrencies in Kenya is limited due to their unregulated nature and the associated risks to users.”
Recent Shifts Toward Engagement (2024–2025)
In response to global trends and regional pressure from countries like Nigeria and South Africa, CBK has shown more openness to dialogue and regulation in 2024 and 2025.
- CBK is now engaging with lawmakers drafting the Digital Asset Bill.
- It continues to warn about crypto risks but supports balanced regulation, which allows innovation without compromising security.
Capital Markets Authority (CMA)
The CMA is responsible for overseeing securities and investment markets. It has shown interest in tokenized securities and blockchain-based investments.
In 2024, it launched consultations on how to classify and regulate digital assets.
Communications Authority of Kenya (CAK)
While not directly involved in financial matters, the CAK plays a role in protecting Kenyans from online fraud and false crypto advertising, especially through social media and websites.
Current Cryptocurrency Laws in Kenya
Here are some of the laws on crypto trading in Kenya:
Crypto Not Legal Tender
As of 2025, cryptocurrencies are not recognized as legal tender in Kenya. This means you can own and use them, but you cannot use crypto to pay taxes or make official government transactions.
No Formal Licensing—Yet
Crypto exchanges and wallet services operating in Kenya are not officially licensed.
However, many of them comply with global standards like Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements to build trust.
Major 2025 Regulation Updates
Here are some of the latest developments that you should keep an eye on:
Proposed Digital Asset Bill
In early 2025, a Digital Asset Bill was proposed by Kenyan lawmakers. Key highlights of the bill include:
- Clear definitions for digital assets, tokens, and virtual currencies.
- Licensing requirements for crypto exchanges and wallet providers.
- Mandatory KYC/AML procedures for all crypto businesses.
- Guidelines on the use of blockchain in fintech and government systems.
If passed, this bill could pave the way for safer and more regulated crypto usage in Kenya.
Kenya Revenue Authority (KRA) and Crypto Taxes
The KRA has signaled interest in taxing digital assets, especially profits from crypto trading.
Although taxation laws are still being drafted, you should prepare for:
- Capital Gains Tax on profits made from crypto sales.
- Value Added Tax (VAT) on crypto-related services.
- Required reporting of crypto holdings on your income tax returns.
Impact on Kenyan Users
Every time there is a new law in force, you should expect that it will favor some while it hurts others in a big way.
Here are the merits and demerits of the KRA crypto taxes on traders and investors alike:
For Traders and Investors
If the proposed laws are implemented, traders will need to:
- Use licensed exchanges once the framework is finalized.
- Submit tax reports for profits from crypto.
- Verify their identities using national documents like an ID or a passport.
This could reduce scams but might also add paperwork and tax obligations.
For Startups and Blockchain Businesses
Blockchain innovators could benefit from the new laws, especially with:
- Government support for blockchain use cases in finance, agriculture, and logistics.
- Opportunities for licensing, which can attract venture capital and partnerships.
- Participation in regulatory sandboxes for testing new crypto products legally.
Risks and Challenges Still Facing Kenya
Here is what to beware of if you want to engage in the cryptocurrency business in Keya:
Lack of Public Awareness
Many Kenyans still don’t understand how crypto works, making them easy targets for fraudsters. Education is key to a safer digital finance environment.
Unregulated Exchanges
Using offshore or unregulated exchanges remains risky. You could lose your money if the platform goes down or gets hacked, with no legal recourse.
How to Stay Safe and Compliant
Here are beginner-friendly steps to protect yourself:
- Only use well-known exchanges with strong KYC processes.
- Keep track of your crypto profits in case tax laws change.
- Avoid deals promising unrealistic returns. If it sounds too good to be true, it probably is.
- Follow updates from CBK, CMA, and KRA through their official websites.
- Use two-factor authentication (2FA) on all your wallets and exchanges.
What’s Next for Crypto Regulation in Kenya?
Kenya is clearly moving toward a more defined crypto legal framework. While things are still evolving, it’s safe to say that stricter licensing, taxation, and consumer protections are on the horizon.
Whether you’re a trader, investor, or curious beginner, staying updated will help you remain compliant—and avoid costly mistakes.
Frequently Asked Questions
Q1: Is crypto legal in Kenya in 2025?
Yes. It is legal to own and trade cryptocurrency, but it is not legal tender. The government is working on regulating it further.
Q2: Do I have to pay taxes on crypto in Kenya?
Currently, crypto taxes are under review. However, you may soon need to declare and pay capital gains tax on your crypto profits.
Q3: Can I register a crypto business in Kenya?
While there’s no official licensing yet, the proposed Digital Asset Bill could soon allow registration and licensing of crypto businesses.
Q4: Is Binance allowed in Kenya?
Binance operates in Kenya but is not officially licensed by local regulators. Use caution and ensure you complete all KYC requirements.
Final Thoughts
Cryptocurrency regulation in Kenya is no longer a distant idea—it’s already in motion.
As the country moves toward a more structured digital economy, both opportunities and responsibilities will grow.
Whether you’re just starting out or already deep into crypto, knowledge is your best defense. Stay informed, stay legal, and stay safe.