Stablecoin issuers in Kenya face stringent new monthly reporting requirements, as the country tightens regulation of digital currencies to ensure transparency and protect investor assets.
Proposed regulations by the Capital Markets Authority (CMA) show that stablecoin issuers will be required to file monthly reports on transactions, the number of asset holders, the value of assets in circulation, and the composition of reserves backing the tokens.
Stablecoins – digital currencies pegged to assets such as the US dollar – are gaining traction in Kenya as a faster and cheaper way to move money across borders. However, they have been exploited for illicit financial activities such as money laundering, ransomware payments, and fraud.
The proposed CMA regulations are aimed at activating the Virtual Asset Service Providers Act (VASP), signed into law by President William Ruto in October 2025, which introduced licensing requirements to protect crypto holders and combat money laundering.
“Issuers of stablecoins shall report on a monthly basis to the relevant regulatory authority the following information: the number of holders; the value, circulation, and peak values of the stablecoins; the average number and average aggregate value of transactions per day during the relevant quarter,” read the regulations.
“The number of consumers and new account holders; the composition of reserve assets in respect of the stablecoin; and instances of de-pegging of the stablecoin.”
The new law places virtual asset providers under the joint regulation of the Central Bank of Kenya (CBK) and the CMA. In addition to monthly disclosures, stablecoin issuers will be required to submit daily transaction data and appoint independent auditors to verify their reserve assets every month.
“Provide a proof of reserve report by an independent approved auditor to the relevant regulatory authority within ten days of the start of the following month,” the regulations state.
The auditors will also conduct annual reviews of systems, internal controls, and redemption policies to ensure compliance with the regulations.
Remittances, merchant payments, cross-border settlements, and everyday transfers have been driving increased adoption of stablecoins in Kenya.
Recently, Kenya was ranked fifth worldwide by cryptocurrency transaction volumes in the 2025 World Crypto Rankings report by the global crypto exchange Bybit. Data from US-based blockchain analytics firm Chainalysis shows that stablecoin transactions worth about Sh426.4 billion ($3.3 billion) were processed in the year to June 2024.
The tokens are increasingly used by traders, diaspora workers, and multinational firms to settle payments, often bypassing traditional banking systems.
Firms such as Yellow Card have helped expand adoption by enabling near-instant conversion of stablecoins into cash via platforms like M-Pesa, with transaction costs significantly lower than those charged by banks and remittance providers.
However, cryptocurrencies have been exploited for illegal activities due to their inherent pseudonymity and decentralised nature, making them harder to detect by traditional financial institutions and law enforcement agencies.
The VASP Act requires all businesses offering crypto-related services and digital assets such as Bitcoin, stablecoins, and non-fungible tokens (NFTs) to obtain a licence from the CMA, conduct Know Your Customer (KYC) checks, and report suspicious transactions.
Similar to traditional lenders and mobile money providers, they must also cooperate with the Financial Reporting Centre (FRC) and the Directorate of Criminal Investigations (DCI).
