Kenya is taking a major step toward regulating the digital asset sector after a parliamentary committee supported the creation of a multi-agency team to monitor virtual asset service providers (VASPs).

The move is part of proposed changes under the Virtual Asset Service Providers Bill, 2025, which aims to give structure to a sector that has operated without legal backing for years.

In its latest report, the National Assembly’s Finance Committee said it had agreed with a proposal submitted by Credence Africa, a social enterprise that called for joint oversight of VASPs across several key regulatory areas. “The committee agreed with the proposal by the stakeholder (Credence Africa),” the report reads.

The proposed supervisory team would bring together the Central Bank of Kenya, Capital Markets Authority, Competition Authority of Kenya, Communications Authority of Kenya, and the Office of the Data Protection Commissioner.

It would also allow the Cabinet Secretary to include other institutions through a gazette notice.

The joint unit is expected to oversee several areas in which VASPs operate, including market practices, user data protection, and digital communications infrastructure.

Digital assets include intangible items such as cryptocurrencies, tokens, or digital codes that represent value created through cryptographic technology and exchanged online.

The committee also approved a recommendation by the Virtual Assets Chamber (VAC) to scrap a section of the Bill that would have allowed off-site surveillance of VASPs. VAC argued that the clause was too broad and lacked proper definitions or limits.

The Bill was introduced in Parliament on April 4, 2025, and has received strong backing from players in the digital currency space.

Many of them have struggled to access banking services for nearly a decade due to a caution issued by the Central Bank of Kenya warning financial institutions against working with crypto-related firms.

At the time, former Central Bank Governor Patrick Njoroge warned that digital currencies could pose risks to financial systems.

However, he acknowledged their benefits, saying they could help increase financial access and lower the cost of transactions.

If passed, the law will require all VASPs to open and operate local bank accounts. This would ensure easier supervision and enhance accountability.

The new legal framework would make Kenya the third African country after Nigeria and South Africa to regulate cryptocurrencies through legislation.

A 2022 United Nations report ranked Kenya as Africa’s top adopter of digital currencies, with 8.5 percent of the population—around 4.25 million people—owning cryptocurrencies. The country ranked above the United States, where 8.3 percent of the population held digital currencies at the time.