Kenya Introduces VASP Act & Revamps Crypto Taxation
Kenya has introduced the Virtual Asset Service Providers (VASP) Act, requiring crypto firms to register, comply with KYC, and have a Kenyan board. The Finance Act 2025 replaces the Digital Asset Tax with excise duty on service fees, reflecting how platforms earn revenue. Kenya's crypto sector is the third-largest in Africa and first in peer-to-peer trading volumes.
The VASP Act mandates anti-money laundering and counter-terrorism financing standards, aligning with Financial Action Task Force guidelines. It also requires crypto firms to have a Kenyan board and comply with KYC procedures. The Central Bank of Kenya and the Capital Markets Authority will coordinate licensing, compliance, and reporting processes.
Industry participants, such as GoChapaa's Chief Marketing Officer Philip Chege, welcome the revised crypto taxation policy. The new tax model targets service fees instead of asset value, which is how digital asset platforms primarily earn revenue.
The VASP Act and Finance Act 2025 aim to regulate Kenya's thriving crypto sector, ensuring compliance with international standards and fair taxation. These regulations are expected to boost investor confidence and promote responsible growth in the industry.
