Kenya bets on crypto regulations to attract global investors

Kenya is finalizing regulations governing cryptocurrencies and virtual assets as the government seeks to position Nairobi as Africa’s leading financial technology and blockchain hub.

Officials from the Nairobi International Financial Centre Authority (NIFCA), the Capital Markets Authority (CMA), and industry players say the country is close to unveiling a legal framework aimed at attracting billions of shillings in investment while bringing oversight to a sector that has largely operated without regulation.

Speaking during the 4th Kenya Blockchain and Crypto Conference (KBCC) in Nairobi, Daniel Mainda, Chief Executive Officer of NIFCA, said the government is working with agencies including the Central Bank of Kenya and CMA to complete regulations under the Virtual Assets Act passed last year.

Mainda said the Nairobi International Financial Centre was created to provide a predictable investment environment capable of attracting global firms in financial services, technology, and regional headquarters to Kenya.

“One of the new innovations that Kenya is at the forefront of leading is now the new space called blockchain and cryptocurrency,” said Mainda.

The proposed regulations have raised concerns among some industry players who argue that high compliance and capital requirements could favour multinational firms over local startups.

However, Mainda defended the ongoing consultations, saying regulators are keen on creating an inclusive framework that supports innovation while protecting the market from fraudulent operators.

“We must get it right. The reason why we have taken time to get these regulations done is because we must listen to everybody,” he said.

He added that Kenya wants Nairobi to become “the home of startups” and “the home of technology” in Africa.

Justus Agoti, a Deputy Director at the Capital Markets Authority, said firms seeking to operate in Kenya’s virtual assets market will be required to establish local offices before obtaining licenses.

“Without that, you are not going to be licensed, local registration will strengthen enforcement and accountability’ said Agoti.

Agoti acknowledged concerns over compliance costs but argued that regulation is necessary to guarantee investor protection and efficient market operations.

“In order for a market to operate efficiently, certain things have to be placed, there is a need to balance compliance costs with investment returns” he said.

He also cautioned that excessive taxation could push traders into informal peer-to-peer channels outside government oversight, calling for continued engagement between regulators and industry players.

Industry stakeholders attending the conference expressed optimism that Kenya could emerge as a continental leader in blockchain and digital finance if the regulations remain inclusive.

Peter Mwangi, Kenya Country Manager for VALR, said Kenya’s widespread use of mobile money and digital payments gives it a competitive advantage in the virtual assets market.

“The regulators have been very open to conversations. The current regulations are forward-looking and designed in such a way that they allow innovation,” said Mwangi.

He noted that millions of Kenyans are already using stablecoins for remittances, cross-border payments and investments, adding that blockchain technology could eventually transform stock trading, banking services and sovereign bond issuance across Africa.