Kenya -- Securities Classification Regulatory Overview

Kenya classifies cryptocurrency tokens as securities under the Capital Markets Act (CMA), administered by the Capital Markets Authority (CMA), if they meet the Howey test: an investment of money in a common enterprise with profits expected solely from the efforts of others. [1] This case-by-case factual determination applies to tokens like ICOs, as confirmed in the 2023 Wiseman Talent Ventures Limited v. Capital Markets Authority case, where a KeniCoin ICO token was ruled a security for involving money invested in a joint enterprise reliant on promoters' efforts.[1][2]

Tokens considered securities include those qualifying as "investment contracts" under the Howey test, such as certain ICO tokens, while the Virtual Asset Service Providers (VASP) Act 2025 defines "virtual assets" broadly as digital representations of value (excluding fiat, CBDC, and CMA-regulated securities). [1][2][4] Tokenized real-world assets (e.g., real estate or carbon credits) may trigger VASP licensing if not fitting existing securities definitions like collective investment schemes, though courts lean toward Howey-like analysis for security status.[2]

Token issuers must register public offers of securities with the CMA or qualify for exemptions; no CMA-approved ICOs exist, and the market remains informal. [1][7] Under VASP Act 2025, token issuers, ICO platforms, and tokenization activities fall under CMA oversight for market-facing operations, requiring licensing alongside anti-money laundering compliance; tokenized securities stay in CMA's framework.[2][4][6]

Secondary trading of security tokens is regulated by the CMA as with traditional securities; virtual asset trading platforms require CMA licensing for exchanges and brokers. [1][4]

Enforcement example: In Wiseman Talent Ventures Limited v. Capital Markets Authority (2023), the court classified the KeniCoin ICO token as a security under the Howey test, halting the offering for lacking CMA approval. [1][2]

Key legislation includes the Capital Markets Act (securities regulation) and VASP Act 2025 (virtual assets). Relevant guidance:

• Freeman Law on Kenya crypto laws: https://freemanlaw.com/cryptocurrency/kenya/ [1]
• Spencer West on virtual asset framework: https://www.spencer-west.com/news/from-regulation-to-opportunity-kenyas-virtual-asset-framework-through-a-capital-markets-lens/ [2]
• Baker McKenzie on regulation evolution: https://blockchain.bakermckenzie.com/2025/01/14/the-evolution-of-cryptocurrency-regulation-in-kenya-from-opposition-to-legalization/ [6]