Kenya has quietly emerged as one of the world’s most active cryptocurrency markets, ranking fifth globally in transaction volumes, driven largely by the rapid uptake of stablecoins, as the East African Country cements her position as Africa’s leading digital finance hub, through a landmark legislation that establishes a comprehensive regulatory framework for cryptocurrencies and digital asset.
The ranking, drawn from global exchange data, places Kenya alongside countries such as the United States, Nigeria, and Vietnam, underscoring how deeply digital assets have penetrated everyday financial activity in the country.
At the heart of this growth are stablecoins such as USDT and USDC, digital currencies pegged to the US dollar. Their stability has made them increasingly attractive for remittances, cross-border trade, merchant payments, and informal savings, particularly in an economy where businesses and households are sensitive to exchange-rate volatility and high transaction costs.
Industry data shows that Kenyans transacted hundreds of billions of shillings’ worth of stablecoins over the past year alone, placing the country among Africa’s largest stablecoin markets.
Kenya ranks fifth globally in crypto use
According to the 2025 World Crypto Rankings report by global cryptocurrency exchange Bybit, the country now ranks fifth globally in crypto transaction volumes, trailing only Ukraine, the United States, Nigeria and Vietnam.
The ranking is driven by Kenya’s heavy use of stablecoins for everyday payments, peer-to-peer transfers and international settlements. Stablecoins such as Tether (USDT) and USD Coin (USDC) dominate activity because they are designed to maintain relatively stable prices by being pegged to fiat currencies.
Stablecoins, which are convertible into traditional currencies such as the US dollar on a 1:1 basis, account for the bulk of activity.
Kenya follows Ukraine, the United States, Nigeria and Vietnam in overall transactional use, according to the report, which attributes the country’s strong performance to the widespread use of crypto for remittances, merchant payments, cross-border settlements and day-to-day transfers.
The report notes that global stablecoin transaction volumes reached an all-time high in July 2025, highlighting their growing role in the global financial system.
“Adoption was led by USD-pegged stablecoins such as USDT and USDC, valued as a hedge against inflation and a gateway to dollar exposure, especially in emerging markets facing currency volatility,” reads the report.
Kenya now ranks ahead of several major economies, including the United Kingdom, Pakistan, the Netherlands, India and Indonesia. Bybit, which is headquartered in Dubai, is the world’s second-largest cryptocurrency exchange by trading volume.
The country’s position is reinforced by consistently high peer-to-peer (P2P) crypto transaction volumes, which have seen Kenya rank prominently both globally and across Africa. This activity is largely driven by remittances and the country’s strong mobile money ecosystem.
Data from New York-based blockchain analytics firm Chainalysis shows that Kenya recorded Sh426.4 billion ($3.3 billion) in stablecoin transactions in the year to June 2024. During this period, Chainalysis ranked Kenya as the fourth-largest recipient of stablecoins in Africa, behind Nigeria, South Africa and Ghana. In 2021, the firm ranked Kenya as the world’s top country in P2P exchange trade.
Bybit notes that Kenya’s market shows strong readiness to adopt cryptocurrencies, particularly in retail transactions.
“This activity points to a population that is already comfortable moving value on-chain, a key prerequisite for scaling crypto payroll,” reads Bybit’s report.
On-chain transactions are recorded and verified directly on a blockchain’s main network, a feature that enhances transparency and security.
Stablecoins are increasingly viewed as a faster and cheaper payment option, particularly for cross-border transfers, which traditionally take days to settle and attract interchange and other fees.
Locally, traders are increasingly using stablecoins to pay for imports, while Kenyans in the diaspora rely on them to send money to family members back home. Multinational companies are also using stablecoins to repatriate billions of shillings, bypassing local commercial banks.
The report argues that Kenya’s payments ecosystem is uniquely positioned to support regulated crypto payroll at scale. With one of Africa’s highest mobile money penetration rates, the market already supports near-instant conversion of on-chain USDC into Kenyan shillings through platforms such as TransFi, even without a native M-Pesa stablecoin.
“This makes it possible for a software developer in Nairobi to be paid by a US-based employer in stablecoins and then cash out locally within minutes, all without touching traditional correspondent banking rails,” reads the report.
Despite Kenya’s strong performance in transactional use, the report ranks the country 51st globally in institutional readiness, citing an unclear regulatory environment as a key challenge. That position, however, is expected to improve following the enactment of the Virtual Asset Service Providers (VASP) Act.
The law requires all crypto service providers, including platforms that facilitate stablecoin salary payments, to be licensed and to comply with anti-money laundering requirements, consumer protection rules and operational security standards.
“It will give employers and payroll platforms a legal pathway to send on-chain payments through regulated intermediaries. This removes one of the biggest barriers for companies: uncertainty over whether using crypto for salaries could trigger compliance or enforcement issues,” Bybit said in the report.
If the VASP law is implemented effectively, Bybit says these capabilities could position Kenya as a leading African hub for regulated on-chain salary payments.
“International companies hiring Kenyan talent could offer salaries in stablecoins with automatic conversion to shillings, ensuring workers can access funds quickly while employers remain compliant,” reads the report.
The findings place Kenya at the centre of what Bybit describes as the next phase of stablecoin adoption, where digital assets have evolved from niche instruments into a foundational element of global digital finance.
Boom Despite Caution
Kenya’s rise as a global crypto hub has unfolded without a clear regulatory roadmap, a contradiction that analysts say is central to understanding the boom. Cryptocurrency has never been illegal in Kenya, but for years it existed in a regulatory grey zone.
Authorities, including the Central Bank of Kenya, consistently warned that crypto was not legal tender and was unregulated, but stopped short of banning its use.
This ambiguity created a paradox. While regulators framed cryptocurrency primarily as a financial risk, citing concerns over fraud, money laundering and consumer protection, adoption continued to accelerate.
Crypto activity expanded largely outside traditional banking channels, driven by peer-to-peer platforms and offshore exchanges, as Kenyans sought faster and cheaper ways to move money locally and across borders.
The same regulatory hesitation helps explain the dominance of stablecoins in Kenya’s crypto ecosystem. Julisha.co.ke financial analysts note that stablecoins gained traction not as speculative assets, but as practical tools. They offered dollar exposure without foreign bank accounts, reduced remittance costs, and enabled faster settlement for traders and freelancers, all while operating beyond the friction of conventional financial systems.
Kenya’s strong mobile-money culture also played a role. With millions already accustomed to digital wallets through platforms like M-Pesa, the leap to crypto-based transfers was smaller than in many other markets.
For many users, crypto became an extension of digital finance rather than a replacement for the shilling. However, the same legal uncertainty that allowed crypto adoption to flourish also exposed users to significant risks. Julisha analysts note that the absence of consumer protection frameworks left many vulnerable to scams, platform collapses and legal uncertainty, a reality that has increasingly concerned policymakers as transaction volumes surged.
That concern is now shaping a shift in policy. Kenya’s move to introduce a Virtual Asset Service Providers (VASP) framework signals the government’s first serious attempt to reconcile innovation with oversight. Rather than encouraging crypto, the new approach reflects recognition that digital assets are already embedded in the economy, and that regulation is needed to protect users, improve transparency and bring the sector into the formal financial system.
The Regulatory Landscape: Kenya’s First Crypto Law Takes Effect
On November 4, 2025, Kenya became one of the first African nations to implement a comprehensive licensing framework specifically designed for cryptocurrency businesses. The Virtual Assets Service Providers Act establishes a dual regulatory structure that assigns oversight responsibilities based on the specific functions crypto companies perform.
Under this framework, the Central Bank of Kenya (CBK) assumes responsibility for overseeing payment systems and custody functions—essentially regulating how crypto businesses handle customer funds and facilitate transfers. Meanwhile, the Capital Markets Authority (CMA) receives jurisdiction over investment and trading activities, including exchanges where Kenyans buy, sell, and speculate on digital assets.
This bifurcated regulatory approach reflects sophisticated understanding of how modern cryptocurrency businesses operate. Unlike traditional financial institutions that typically fall clearly under either banking or securities regulation, crypto platforms often perform hybrid functions that blur these traditional boundaries. A single platform might offer wallet custody services (traditionally banking), facilitate peer-to-peer transfers (payment services), and provide trading venues (securities functions). Kenya’s dual-regulator model attempts to address this complexity by assigning oversight based on specific activities rather than forcing crypto businesses into ill-fitting regulatory categories.
The legislation represents years of policy development and consultation with industry stakeholders, positioning Kenya as a potential leader in African cryptocurrency regulation. The continent has emerged as one of the world’s fastest-growing cryptocurrency markets, with grassroots adoption driven by practical use cases including cross-border remittances, protection against currency devaluation, and access to financial services for unbanked populations.
Virtual asset service providers operating in Kenya will face strict obligations designed to protect consumers and prevent financial crimes. Under the new law, operators must establish a physical office in Kenya and appoint a board of at least three natural persons. This physical presence requirement has drawn criticism from some quarters, as purely digital operators may find this burdensome, particularly given the inherently decentralized nature of blockchain infrastructure.
Additional requirements include segregating client funds from company assets, maintaining robust insurance coverage, and holding bank accounts within Kenya’s financial system. Companies must also implement formal conflict-of-interest policies, keep meticulous transaction records, and appoint dedicated compliance officers. Independent IT audits will be mandatory to ensure systems meet security standards.
The legislation extends anti-money laundering (AML) and counter-financing of terrorism (CFT) obligations to the crypto sector, requiring companies to implement comprehensive Know Your Customer (KYC) procedures and report suspicious transactions above specified thresholds to authorities. This alignment with international standards is particularly crucial for Kenya, which was placed on the Financial Action Task Force (FATF) grey list in February 2024 due to strategic deficiencies in its anti-money laundering and counter-terrorism financing framework.
Failure to comply with the new regulations could result in severe sanctions. Violators face fines of up to 25 million Kenyan shillings ($193,500) or imprisonment for up to five years. Regulators have been empowered to scale punishments based on the severity of violations and profits made from them, while retaining powers to act swiftly when investors face imminent harm. Operators already active in the market will have a one-year transition period to comply with the new rules.
The rise in cryptocurrency use among young people aged 18 to 35—as a means of payment, investment, and transaction—is cited as one of the main drivers of reform. This demographic shift aligns perfectly with Kenya’s existing digital infrastructure and entrepreneurial culture.
Kenya is building on its long-standing leadership in mobile financial services to support the integration of new financial technologies. The country pioneered mobile money with M-Pesa, which was established in 2007 and handles an astonishing 59% of Kenya’s GDP. This existing comfort with digital financial services has created a natural pathway for cryptocurrency adoption.
With the Virtual Asset Service Providers legislation, Kenya stands at the threshold of a transformative period in its financial sector. The legislation represents more than just regulatory compliance—it signals the country’s ambition to lead Africa’s digital finance revolution while ensuring adequate consumer protection and financial stability.
The Regulatory Gap: Law Without Implementation Framework
However, Kenya’s new crypto law faces a fundamental problem that creates space for the current confusion: while the Act itself is legally in force, the specific regulations required to actually begin licensing Virtual Assets Service Providers have not yet been issued. This creates a peculiar legal limbo where cryptocurrency businesses cannot obtain licenses because the licensing process doesn’t yet exist, yet the law formally regulates an industry that technically should not be operating without authorization.
In a joint notice issued on November 19, 2025, the Central Bank of Kenya and Capital Markets Authority addressed this situation directly, warning the Kenyan public that no Virtual Assets Service Provider has received authorization to operate:
“Currently, CBK and CMA have not licensed any VASPs under the Act to operate in or from Kenya,” the regulators stated unequivocally. The notice continued by cautioning that any companies claiming authorization are operating illegally and that consumers should exercise extreme caution when dealing with such entities.
The regulators explained that the National Treasury is currently developing the implementing regulations that will establish the actual licensing procedures, application requirements, compliance standards, and operational guidelines crypto businesses must meet. Until these regulations are published and take effect, the licensing framework exists only in theory rather than practice.
This transitional period creates significant uncertainty for both crypto businesses attempting to operate compliantly and consumers trying to determine which services are legitimate. The situation parallels challenges other jurisdictions have faced when implementing cryptocurrency regulation, where the gap between legislative intent and operational implementation creates opportunities for both confusion and potential exploitation.
Broader African Context: Kenya as Continental Cryptocurrency Leader
Kenya’s cryptocurrency journey unfolds within broader continental dynamics that position Africa as one of the world’s most dynamic crypto adoption regions. Multiple factors drive this trend:
Remittances: Africa receives over $100 billion annually in remittances, with traditional transfer mechanisms often charging exorbitant fees and imposing frustrating delays. Cryptocurrency offers faster, cheaper alternatives for cross-border money movement.
Currency Instability: Many African nations experience significant currency volatility and inflation, eroding the value of local savings. Bitcoin and stablecoins pegged to stronger currencies provide hedges against local currency depreciation.
Mobile Money Infrastructure: Africa’s pioneering mobile money systems created cultural comfort with digital financial services and built technological infrastructure cryptocurrency can leverage. Kenya’s M-Pesa alone serves over 50 million users, demonstrating massive scale digital payment adoption.
Youth Demographics: Africa has the world’s youngest population, with median ages in many nations below 20 years. Younger demographics typically show greater comfort with digital technologies and willingness to adopt innovative financial tools.
Entrepreneurship: Limited formal employment opportunities drive high levels of entrepreneurial activity, often requiring access to capital and payment mechanisms that traditional systems provide inadequately. Cryptocurrency can fill these gaps.
These factors create fertile ground for cryptocurrency adoption across the continent. According to Chainalysis’s 2024 Geography of Cryptocurrency Report, multiple African nations rank among global leaders in cryptocurrency adoption when measured relative to population and economic size.
Conclusion
For Kenya, the next 12 to 18 months will be critical. The Treasury’s detailed regulations on stablecoins, tokenization of real-world assets, trading platforms, capital standards, and anti-money laundering compliance will determine whether the country achieves its ambition of becoming Africa’s crypto hub. Success will require balancing regulatory rigor with the flexibility needed to foster innovation, ensuring that compliance requirements don’t become barriers to entry for the young entrepreneurs and small startups who have driven Kenya’s crypto adoption.
The country’s approach—grounded in its proven track record with mobile money innovation, informed by international best practices, and responsive to local economic realities—could serve as a model for other emerging markets seeking to harness the transformative potential of digital assets while managing associated risks.
Kenyan authorities justify this regulatory shift as necessary to provide legal certainty for investors and fintech start-ups while positioning the country as the gateway for cryptocurrency adoption across Africa.
The success or failure of Kenya’s cryptocurrency regulation will have implications far beyond its borders, potentially shaping how other African nations approach digital asset oversight and influencing the continent’s role in the global cryptocurrency ecosystem for years to come.
