Kenya's impending Virtual Asset Service Providers (VASP) Bill, 2025, aims to formalize the country's Web3 industry by providing regulatory clarity and consumer protection to the rapidly growing digital asset sector. While experts see potential benefits like reduced remittance costs and new financial models, concerns remain regarding overregulation and its impact on innovation.

• The bill could lead to banks and Payment Service Providers (PSPs) offering services for licensed VASPs, a significant shift for younger teams.
• Basil Ogola, crypto lawyer and director at the Virtual Asset Chamber of Commerce (VACC), highlighted that regulated crypto could slash high remittance transfer fees affecting billions of shillings.
• Concerns include stringent Know Your Customer (KYC) and Know Your Transaction (KYT) requirements, increased compliance costs deterring smaller innovators, and the risk of favoring larger capital players over youth-led startups.
• The bill's heavy focus on anti-money laundering (AML) and counter-terrorism financing (CTF) compliance is driven partly by the goal of removing Kenya from the Financial Action Task Force’s (FATF) grey list.
• A significant challenge identified is enforcing provisions on decentralized finance (DeFi) platforms and cross-border actors due to a lack of clear local jurisdiction.