NAIROBI, Kenya, Aug 15 – Kenya’s Virtual Asset Service Providers (VASP) Bill could be a pivotal moment for the country’s burgeoning Web3 and crypto ecosystem, unlocking new legitimacy and growth opportunities for youth-led startups and established players, experts say.
Larry Cooke, Binance Africa’ head of legal counsel said amendments being proposed by members of Kenya’s National Assembly reflect a willingness to refine Kenya’s approach to digital asset taxation and regulation.
“This achievement reflects Kenya’s commitment to modernising its tax base and recognising digital assets as an important part of the future financial ecosystem. It signals progress in an area that many countries are still grappling with, and that deserves to be acknowledged,” he said.
Benjamin Arunda, Africa’s first blockchain-published author and chair of the Africa Blockchain Council, underscored the Bill’s offer to crypto startups of official legal recognition, removing the uncertainty that has limited their growth so far.
He said the licensing regime “will bring legitimacy to the businesses and regain the trust of most consumers who until now still see crypto as a scam in entirety.”
However, Arunda cautioned that the Bill currently leans heavily towards consumer protection, with strict Know Your Customer (KYC) and Know Your Transaction (KYT) requirements that could undermine crypto’s characteristic anonymity.
“Annual licensing will increase compliance and operation costs making it unattractive for Web3 innovators with virtual asset elements,” he added.
Still, he acknowledged progress, noting “the regulator has grown in their understanding of the sector.”
Victor Kyalo, a veteran Nairobi crypto community manager, expressed optimism about the Bill’s potential to unlock investment inflows and provide a regulated environment for youth-led startups to grow.
Nevertheless, he pointed out that “an equilibrium hasn’t been met yet” as issues around privacy, licensing challenges, and restrictions on innovation need resolution to fully realize the opportunities for investor confidence and job creation.
On Kenya’s readiness to support a legal crypto economy, Sande noted that banks have quietly allowed cryptocurrency trading despite occasional bans but have largely “been cautiously awaiting regulatory clarity.”
He stressed that “a lot still depends on how the CBK (Central Bank of Kenya) and the CMA (Capital Markets Authority) coordinate once the Bill passes” to provide clear oversight that will encourage banks to engage more fully.
Arunda highlighted a large knowledge gap in banks and traditional financial institutions, pointing out that most have treated crypto as a passing fad.
“Most traditional banks see crypto as a hype that is passing away,” he said, adding that fintech startups that embraced crypto early could “leapfrog significantly” as banks scramble to catch up.
Roselyne Wanjiru, a Nairobi-based blockchain researcher and analyst, noted that some banks like Standard Chartered are beginning private tests of crypto-related payment solutions but cannot make public announcements until official regulatory restrictions are revised.
Perhaps the Bill’s most promising prospect lies in fostering partnerships between youth-led Web3 startups and traditional financial players. “Collaboration and partnerships could ease the path of onboarding and solutions delivery between legacy financial institutions and VASPs.
Perhaps, when the cautionary notice is lifted, such partnerships can thrive,” Wanjiru said.
Cooke noted that Kenya has an opportunity to lead Africa’s digital economy by crafting a regulatory environment “that is both fair and practical.” He added: “When considering what more is required, the path forward lies in balancing fiscal responsibility with innovation enablement.”
