The Treasury has substantially cut its earlier proposed minimum capital for cryptocurrency firms by up to 40 percent, bowing to pressure amid warnings that steep charges would deter investments in the fast-rising segment.
New regulations published by Treasury Cabinet Secretary John Mbadi show that cryptocurrency operators are required to have a minimum paid-up capital of up to Sh300 million, marking a significant reduction from the earlier proposed limit of Sh500 million.
Stablecoin issuers have the highest minimum paid-up capital requirements of Sh300 million, down from the earlier proposed Sh500 million, while their liquid capital is set at Sh60 million or 100 percent of their current liabilities for at least 30days—a reduction from their earlier suggested Sh100 million, or 100 percent of current liabilities, whichever is higher.
Stablecoins are digital currencies pegged to assets such as the US dollar. Paid-up capital represents the fully paid-up ordinary shares of the company, while liquid capital is the amount by which the company’s current assets exceed its liabilities.
Mr Mbadi, however, retained the annual licence fee for virtual asset providers at up to Sh2million for Stablecoin insurers.
The reduction in the capital requirement for crypto firms came after the Virtual Assets Association of Kenya (VAAK) warned that the earlier proposed steep charges would deter investments.
“For Kenya to attract credible global players, the paid-up capital requirements, licence fees, transaction fees and compliance requirements need to be reconsidered,” VAAK chairman Peter Onyango had told the Business Daily.
The capital requirements also include reserves invested in low-risk assets and are meant to build safeguards for investors engaged in trading virtual assets. The regulations also require asset providers to maintain liquidity pegged to the size of liabilities.
The capital requirement for tokenisation businesses – those turning real-world or digital items like real estate and bonds into digital assets – has been set at Sh10million in paid-up capital and liquid capital of Sh2million or 8 percent of its total liabilities, whichever is higher.
At the same time, the State has set the paid-up capital for providers of initial coin offerings (ICOs) at Sh20 million and a liquid capital of Sh4million or 8 percent of its total liabilities, whichever is higher. An ICO or token sale is a form of capital raising in which a project issues and sells digital tokens.
The investment advisory licence, meanwhile, no longer requires paid-up or liquid capital, opening the market to individuals and small firms.
For virtual asset wallet providers, the paid-up capital has been set at Sh150 million with a liquid capital of Sh30 million or 100 percent of current liabilities for at least 30 days, whichever is higher.
The guidelines are meant to implement the Virtual Assets Service Providers Act 2025, which became effective in November 2025.
The VASP Act mandates the Central Bank of Kenya and the Capital Markets Authority jointly license, supervise, and regulate the virtual asset providers.
The legislation was introduced in response to rising use of virtual assets in recent years.
Local traders are increasingly using stablecoins to pay for imports, while Kenyans in the diaspora are wiring money home using the tokens.
Multinational companies are also adopting them to repatriate earnings, bypassing local commercial banks, where transactions attract multiple fees and can take days to settle.
However, digital currencies have been exploited for money laundering, terrorism financing and crime due to their pseudonymity and ability to be transferred across borders without monitoring by traditional financial institutions and law enforcement agencies.
