Introduction: Kenya’s Fintech Explosion
Kenya is one of Africa’s fintech powerhouses. From the global success of M-Pesa to a wave of startups in digital lending, payments, and blockchain, the country has become a hub of financial innovation. But with opportunity comes regulatory scrutiny.
For years, fintech has operated in a grey legal space, especially in areas like cryptocurrency and digital lending. As we enter 2025, regulators such as the Central Bank of Kenya (CBK), the Capital Markets Authority (CMA), and the Office of the Data Protection Commissioner (ODPC) are tightening oversight. For fintechs, investors, and users, understanding the evolving legal framework is crucial.
Current Legal Position on Crypto in Kenya
Cryptocurrency in Kenya remains unregulated but not illegal.
• In 2015, the CBK issued a circular warning banks against dealing in crypto, effectively limiting formal financial institutions from facilitating crypto transactions.
• However, Kenyans remain among the top adopters of crypto in Africa, trading billions annually through peer-to-peer (P2P) platforms.
• The CBK has also launched discussions on a Central Bank Digital Currency (CBDC), which could coexist with or regulate private crypto assets.
While there is no specific “Crypto Act”, existing laws like the Proceeds of Crime and Anti-Money Laundering Act, 2009 (POCAMLA) apply, especially for Anti-Money Laundering (AML) and Know Your Customer (KYC) compliance.
The CMA’s Role: Fintech Sandbox & Digital Assets
The Capital Markets Authority (CMA) has taken a proactive role through its Regulatory Sandbox (2019), which allows fintechs to test innovations under supervision. Startups testing blockchain-based products or digital lending platforms often enter this sandbox before scaling.
In 2022, the CMA issued draft Guidelines on Digital Assets and Tokens, signaling a move toward structured crypto regulation. These guidelines focus on:
• Investor protection in Initial Coin Offerings (ICOs).
• Registration of platforms dealing in digital assets.
• Disclosure requirements for whitepapers and tokenomics.
Digital Lending & Consumer Protection
Kenya’s digital lending boom has sparked concerns about predatory practices, high interest rates, and misuse of personal data. In response:
• The Central Bank of Kenya (Amendment) Act, 2021 brought digital lenders under CBK regulation.
• Lenders must now obtain licences, comply with fair lending rules, and submit to oversight.
• The Data Protection Act, 2019 and ODPC guidelines also apply, particularly to lenders who scrape or misuse borrowers’ phone data.
The 2025 Outlook: What’s Next for Fintech Regulation in Kenya?
Several trends are shaping the regulatory future:
1. Crypto Taxation: The Kenya Revenue Authority (KRA) is exploring how to tax crypto gains, following global trends.
2. Stablecoin & CBDC Rules: Expect CBK to issue clearer guidance on stablecoins and Kenya’s CBDC roadmap.
3. Digital Asset Exchanges: Licensing and compliance requirements for crypto exchanges are likely.
4. Cross-Border Payments: Regulations on remittances via blockchain and mobile money interoperability are in discussion at EAC level.
5. Stronger Consumer Protections: Especially around data use, lending transparency, and dispute resolution.
Practical Tips for Fintechs & Crypto Startups
• Engage Early with Regulators: Consider the CMA sandbox or CBK licensing pathways.
• Draft Compliant Whitepapers & Smart Contracts: Align with FATF (Financial Action Task Force) standards.
• Adopt AML/KYC Best Practices: Especially if facilitating cross-border transfers.
• Prioritize Data Protection: Register with ODPC, publish privacy policies, and manage consent.
• Seek Legal Guidance: Given the fluid regulatory space, legal structuring is essential for investor confidence.
Conclusion & CTA
Kenya’s fintech and crypto landscape is entering a new era. While regulation is tightening, it also provides clarity and legitimacy — crucial for investor confidence and global partnerships. Startups that take compliance seriously will gain a competitive edge.
👉 At Miano Njogu Advocates, we advise fintechs, blockchain startups, and investors on compliance with CBK, CMA, ODPC, and FATF guidelines. Whether you’re launching a digital lending app, structuring a token sale, or navigating cross-border fintech regulations, we can guide you through Kenya’s evolving fintech ecosystem. Contact us today.