Stablecoin Firms Face Compliance Hurdles Under Kenya’s New VASP Rules

Kenya’s Virtual Asset Service Provider (VASP) framework, unveiled in late 2025, is moving from policy draft to enforcement. Operators say they must now meet licensing, insurance, and reporting standards that resemble those for banks. The shift follows a conference in Nairobi where industry leaders warned that compliance costs could rise sharply.

At the Kenya Blockchain & Crypto Conference 2026, Edline Murungi of Yellow Card said firms are preparing for a stricter compliance environment as regulators move from drafting to enforcement. She noted that insurance requirements, especially cyber and directors’ liability coverage, are hard to obtain locally, while Bill Okello of Steakhouse Financial added that many banks still rely on old cautionary guidance from earlier crypto debates, creating uneven treatment of licensed virtual asset firms. Stablecoins emerged as a major point of contention, with Tether’s Mabuti Mutua explaining that regulators are still fitting global issuers, local exchanges, and wallet operators into the licensing structure.

The VASP rules require stablecoin issuers to segregate reserves, submit regular audits, and maintain minimum capital thresholds akin to payment institutions. For example, Tether (USDT) holds about $83 billion in reserves, representing roughly 55 % of the $150 billion global stablecoin market; any change in reserve verification could affect its 24‑hour price stability, which typically stays within ±0.05 %. Local exchanges like Yellow Card, which processed over $2 billion in transaction volume in 2024, may need to partner with insurers to meet cyber‑coverage mandates, a step that could raise operational costs by an estimated 10‑15 %. Banks that continue to apply outdated cautions may limit access to corporate accounts, slowing onboarding for compliant firms. Industry analysts expect the enforcement phase to trigger a wave of compliance spending, with legal and regulatory teams expanding at firms that previously relied on ad‑hoc oversight. Watch for the Central Bank of Kenya’s forthcoming guidance on reserve segregation and for any updates to the insurance framework that could ease coverage gaps for crypto‑focused businesses.