Kenya’s parliament has passed a bill to regulatedigital currencies and virtual assets, moving the country closer to formaloversight of its fast-growing crypto market. The Virtual Asset ServiceProviders Bill, approved last week, now awaits President William Ruto’ssignature to become law.Digital assets meet tradfi in London at the fmls25The legislation sets out clear licensing rules forcrypto issuers and exchanges, a development that aims to improve investor confidence and attract fresh investments into Kenya’s fintech sector.This move could position Kenya as a key hub for cryptoinnovation in Africa, as the country seeks to attract more investments amid abooming digital finance environment.A Dual Regulatory StructureThe Virtual Asset Service Providers Bill 2025delineates responsibilities between two main bodies. The Central Bank of Kenyawill oversee the licensing of stablecoins and other virtual assets, while theCapital Markets Authority will regulate exchanges, brokers, and tradingplatforms.Parliament passes virtual asset law to boost crypto investments https://t.co/zPLOL69ZTF— Citizen TV Kenya (@citizentvkenya) October 14, 2025This approach replaces an earlier proposal for aseparate regulatory authority, streamlining supervision under existing agencieswith mandates adjusted to cover the crypto sector. Operators will face strictrequirements, including physical presence in Kenya, board compositionstandards, client fund segregation, and compliance with anti-money launderingprotocols.As digital assets gain global traction, governmentsstruggle to balance innovation with risk management. Kenya’s legislation drawsinspiration from regulatory models in the US and the UK, aiming to reducevulnerabilities such as fraud and money laundering often associated withanonymous crypto transactions. The law also introduces stringent penalties fornon-compliance, including steep fines and prison terms. By implementing thesemeasures, Kenya hopes to provide a safer environment for investors whiletapping into the opportunities presented by the expanding fintech landscape.Strategic Importance Amid Stablecoin SurgeThis law coincides with a global surge in US dollar-backed stablecoins. Regulators worldwide warn that these stablecoins can destabilize the currencies of less developed economies. Kenya’s law, by bringingstablecoin issuance under central bank oversight, seeks to protect monetarystability while fostering innovation.You may also like: Worldcoin Ordered to Delete Biometric Data in Kenya Over Privacy BreachPast interactions between the government and majorcrypto exchanges like Binance and Coinbase signal potential increasedinvestment flows into Kenya’s fintech sector, supported by the newlypredictable regulatory framework.Kenya’s population, especially younger demographicsaged 18 to 35, increasingly uses virtual assets for trading, payments, andbusiness. The precedent set by Kenya’s mobile financial service innovations,notably M-Pesa, highlights the country’s readiness to adopt new financialtechnologies.While virtual assets have grown globally over the pastdecade, a lack of regulation has sparked concerns. With this new bill, Kenyaaddresses those regulatory gaps, aiming to remove the sector from a prior grayarea and bring it in line with international standards.This article was written by Jared Kirui at www.financemagnates.com.