‘Too Much Power?’ Critics Warn Kenya’s Central Bank Now Controls Your Stablecoins After New Crypto Rules.

Kenya’s New Crypto Law Hands Central Bank Control Over Stablecoins, Sparking Debate

• Kenya’s parliament has passed the Virtual Asset Service Providers (VASP) Bill, which now awaits presidential assent to become law.
• The new legislation grants the Central Bank of Kenya (CBK) significant powers to license and regulate stablecoin issuers and other digital asset providers.
• Critics voice concerns over potential government overreach and the risk of stifling innovation, while supporters argue it provides much-needed legal clarity.
• The bill positions Kenya as a regulatory leader in Africa’s crypto space, drawing inspiration from frameworks in the US and UK.

Breaking New Ground as Kenya’s Crypto Law Passes

Kenya is on the verge of making history in the digital asset world. The nation’s parliament recently passed the Virtual Asset Service Providers (VASP) Bill, a landmark piece of legislation that now only needs the president’s signature to become law. This move is set to bring a whole new level of clarity to the country’s booming crypto market. “Kenya is one signature away from making regulatory history,” says Chebet Kipingor, the Country Lead for Busha Kenya.

The significance of this step isn’t lost on policymakers. In an interview with Reuters, Kuria Kimani, the chair of the parliamentary finance committee, described the bill as “a turning point for legal clarity in Africa’s digital asset sector.” For years, crypto enthusiasts and businesses have operated in a grey area. This law is the first real attempt to draw clear lines in the sand, defining who can operate and under what rules.

The Central Bank’s Expanding Powers Over Stablecoins

At the heart of the new rules is a major power shift. The Central Bank of Kenya (CBK) is now in the driver’s seat, tasked with overseeing the licensing and regulation of stablecoins and other digital asset issuers. This means any company wanting to issue a stablecoin pegged to the Kenyan shilling, for example, will have to go through the CBK first. This regulatory structure is similar to how traditional financial institutions are managed, a move that could bring more stability but also more control. You can learn more about how stablecoins are rewiring global finance in our previous coverage.

According to Kuria Kimani, “This structure is designed to balance safety and innovation, ensuring clear guidelines for all digital asset operators.” The idea is to create a safe environment for consumers without killing the innovative spirit that makes crypto so exciting. However, the law also gives the Treasury Cabinet Secretary the authority to create subsidiary rules that could deeply impact how stablecoins are issued and traded in the market, a detail that has not gone unnoticed.

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What Critics Are Saying About Centralization and Control

Not everyone is thrilled about the new arrangement. Voices from both the crypto industry and civil society are raising red flags about the potential for overreach. “We’re concerned about the potential for overreach, especially with broad Treasury powers in subsidiary regulation,” argued Samuel Njoroge, a spokesperson for the Crypto Kenya Association, in a statement quoted by Bloomberg. The fear is that too much control concentrated in one place could lead to rules that are out of touch with how the technology actually works.

There are also worries that stricter Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements, while well-intentioned, could create high barriers to entry. These measures might end up sidelining smaller, innovative firms that don’t have the resources to navigate complex compliance hurdles. Regulators, however, maintain that their goal is to foster a healthy ecosystem. “The new framework is meant to encourage innovation while protecting consumers from systemic risks,” says Lydia Dulo, Head of Policy at the Capital Markets Authority, which will regulate other aspects of the crypto market. It’s a classic balancing act: how to regulate without suffocating growth.

Global Lessons and Regional Tensions

Kenya didn’t come up with these rules in a vacuum. The country’s regulatory model took cues from frameworks in the United States and the United Kingdom, aiming for a similar blend of innovation and transparent supervision. With this law, Kenya joins South Africa and Mauritius as one of the few African nations with a clear regulatory stance on crypto, positioning itself as a leader on the continent. This is particularly interesting when compared to the crypto boom in South Africa, which has taken a slightly different path.

But the global conversation is far from settled. The Financial Stability Board (FSB), an international body that monitors the global financial system, recently warned against getting too hands-on with oversight. Instead, the FSB advocates for stronger collateral rules to prevent stablecoin runs, raising questions about whether Kenya’s direct-control approach is the right one. It highlights a fundamental tension in crypto regulation worldwide: how much is too much?

What’s Next for Kenya’s Crypto Industry

With a legal framework almost in place, the market is already buzzing with anticipation. Executives from major crypto exchanges like Binance and Coinbase are reportedly eyeing a formal entry into Kenya, waiting for the final green light and detailed guidance from the CBK. This could be a game-changer, bringing significant investment and legitimacy to the local scene. As Kuria Kimani puts it, “Clear rules could turn Kenya’s crypto enthusiasm into economic growth and jobs.”

The real test, however, will be in the details. The next critical step is for the Treasury Cabinet Secretary to release the subsidiary regulations. These will lay out the practical standards for everything from capital adequacy and cybersecurity to consumer protection frameworks for stablecoin issuers. For businesses looking to innovate under these new rules, platforms like Make.com could be instrumental in automating compliance and operational workflows.

Despite the lingering questions and concerns, the overall mood is one of cautious optimism. The law, for all its potential flaws, sends a powerful message. As Chebet Kipingor noted, “The law sends a strong signal to investors that Kenya is open for transparent and responsible digital asset innovation.” The world will be watching to see if Kenya can get the balance right.