When Kenya’s Virtual Asset Service Providers (VASP) Bill, 2025 passed its third reading in Parliament, it marked a decisive step in the country’s long-delayed journey toward formal recognition of the digital asset economy. Yet beneath the applause lies a more nuanced story not just of regulation, but of regulatory philosophy.

The final version of the Bill departs significantly from its earlier drafts. The most visible change is the removal of the proposed Virtual Assets Regulatory Authority (VARA) — once envisioned as a standalone agency to license and oversee crypto and token-based services. Instead, regulatory responsibility now lies squarely with existing financial supervisors: the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA).

This move speaks volumes about Kenya’s current approach to financial innovation cautious, integrated, and institutionally conservative. Policymakers appear intent on embedding virtual assets within the formal regulatory ecosystem rather than creating a parallel regime.

What business leaders must zero in on

For Kenya’s established virtual asset firms, the VASP Bill 2025 is not a compliance checklist it’s a strategic inflection point. The law ushers in a new operating environment where digital asset businesses must align themselves with the structure and discipline of the formal financial system. The real test will come in how these organizations adapt within the first ninety days after the Bill becomes law.

The first priority for any serious player will be regulatory positioning. Each business must determine whether it falls under the Central Bank of Kenya or the Capital Markets Authority, since oversight will now depend on the nature of the activity payments and stablecoin operations leaning toward the CBK, and investment or tokenized instruments falling squarely within the CMA’s purview. Those that act quickly to interpret their placement and initiate dialogue with their regulators will influence how implementation unfolds.

Internally, firms will need to move beyond symbolic compliance. The new regime expects a deliberate restructuring of governance, risk, and operational systems. This means creating a compliance taskforce that sits at the heart of business decision-making rather than at its periphery. Policies on anti-money laundering, data protection, custody of assets, and consumer disclosure must be reviewed and tested against international standards. What regulators will be watching for is not formality, but institutional maturity.

Custody and wallet management will become the next frontier of scrutiny. The Bill’s requirement for segregation of client assets forces companies to separate client funds from operational accounts both legally and technically. This will demand system upgrades and new audit trails to demonstrate trustworthiness in the eyes of regulators and investors alike.

Tax and accounting alignment will also require urgent attention. With the Kenya Revenue Authority now recognizing income and value-added tax obligations on virtual asset transactions, VASPs must ensure their financial reporting frameworks can handle the transparency this implies. Those that get this right will find tax clarity to be a competitive advantage, particularly as international partners seek compliant jurisdictions within Africa.

Perhaps the most delicate shift will be in how the industry organizes itself. The scrapping of the proposed Virtual Assets Regulatory Authority leaves no dedicated institutional champion for digital assets. Instead of relying on legacy associations that have lost relevance, the sector will need to find coherence through new policy consortia and regulator-led sandboxes. These forums convened by CBK, CMA, or through public-private alliances will shape the secondary regulations, licensing conditions, and technical guidelines that give the Bill its real-world meaning. Firms that remain silent during this period risk having the rules written for them, not with them.

Finally, established VASPs must confront the question of strategic fit. Compliance costs will rise, and not every business model will survive the transition. Some firms may pivot toward institutional custody, tokenization services, or infrastructure support rather than retail trading. Others will double down on consumer trust and transparency as differentiators in a newly regulated market. Whatever the path, the first ninety days after assent will separate the market leaders from the rest.

The VASP Bill 2025 is, in essence, Kenya’s invitation to professionalize its digital asset ecosystem. For business leaders, zeroing in on governance, regulatory relationships, and operational transparency will determine who thrives in this new era and who is left looking in from the margins.