Kenya -- Custody Regulations Regulatory Overview

Kenya's Virtual Asset Service Providers (VASP) Bill, passed by Parliament on October 7, 2025, establishes the primary regulatory framework for cryptocurrency/digital asset custody, mandating licensing for custodial wallets and related services under oversight by the Central Bank of Kenya (CBK) for payments, custody, and wallets, and the Capital Markets Authority (CMA) for investment tokens and secondary markets.[1][3]

Custodial License Requirements

Licensing is mandatory for entities providing custodial wallets, exchanges, brokerages, payment gateways, and stablecoin issuance. CBK leads supervision for custody and wallets, with expected post-assent guidelines on capital requirements, safeguarding, reporting, and cyber standards. Foreign VASPs serving Kenyans must regularize or partner with licensed entities.[1][3]

Segregation of Client Assets Rules

Search results do not specify explicit segregation rules; however, the framework emphasizes safeguarding standards in forthcoming guidelines, and users are advised to move assets to self-custody wallets post-purchase to avoid risks like exchange freezes or statutory manager suspensions (up to two years).[1][4]

Insurance/Bonding Requirements

No specific insurance or bonding mandates are detailed in available sources; anticipated guidelines may address these under safeguarding and capital standards.[1]

Cold Storage Mandates

Results contain no explicit cold storage requirements for custodians.[1-5]

Qualified Custodian Definitions

The VASP Bill does not provide a specific definition of "qualified custodians" in the results; regulated VASPs (including custodial wallet providers) meeting licensing and oversight criteria under CBK/CMA qualify as compliant entities.[1][3]

Pending Custody Legislation

The VASP Bill was signed into law in October 2025, with nationwide consultations ongoing as of early 2026 and 2026 VASP Regulations in public comment (e.g., addressing seizure powers under Regulation 139(e) for hardware wallets/seed phrases via court order). Treasury guidelines, pilots, and sandboxes are expected imminently.[1][3][4]

Prior to 2025, no crypto-specific custody rules existed; existing laws (e.g., Capital Markets Act, Central Bank of Kenya Act) applied indirectly, with CBK warnings against virtual currencies.[2][5] The Draft National Policy on Virtual Assets and VASPs (pre-2025) informed the framework but is superseded.[5]

Specific regulatory references (from search results):

• Virtual Asset Service Providers Bill 2025: https://www.afriwise.com/blog/kenya-now-has-a-crypto-law-virtual-asset-service-providers-vasp-bill-2025[1]
• Draft National Policy on VAs and VASPs: https://newsite.treasury.go.ke/sites/default/files/Notices/DRAFT-NATIONAL-POLICY-ON-VAs-AND-VASPs.pdf[5]