Nairobi, Kenya – Kenya’s move to draft a Virtual Asset Service Providers (VASP) Bill has ignited debate among crypto entrepreneurs, lawyers and regulators over how to balance innovation with consumer protection. The draft law, unveiled in mid‑August, seeks to licence and regulate exchanges, custodians and other players in the digital‑asset ecosystem. Supporters argue that bringing cryptocurrencies under a clear legal framework could lower remittance costs, open new funding channels for small businesses and encourage foreign investment.

Blockchain lawyer Basil Ogola told reporters that a regulated market could spur growth by providing certainty for investors and enabling more competitive pricing for diaspora transfers. He cautioned, however, that the bill contains stringent know‑your‑customer and anti‑money‑laundering provisions that may impose high compliance costs on start‑ups. Ogola warned that excessive regulation could push small innovators out of the market, leaving it to larger companies with the resources to meet administrative requirements.

Blockchain author Benjamin Arunda said the bill appears to prioritise consumer protection and revenue collection, potentially giving incumbents a competitive advantage. He urged lawmakers to strike a balance that supports innovation while guarding against fraud. Analyst Roselyne Wanjiru noted that Kenya is among Africa’s leaders in crypto adoption and warned that poorly calibrated rules could stifle a thriving community of developers and traders. She said regulators should engage industry stakeholders and look at models from jurisdictions that encourage responsible growth.

The Central Bank of Kenya has previously warned citizens about the risks of unregulated digital assets, including volatility and scams. The proposed bill would require VASPs to register with the government, maintain minimum capital reserves and submit to audits. It would also grant regulators the power to freeze accounts suspected of illegal activity. Proponents say these measures will protect investors and enhance Kenya’s reputation as a safe destination for fintech investment.

Public consultations on the draft law are ongoing. Lawmakers are expected to consider amendments that address concerns raised by innovators while ensuring that the final legislation aligns with international standards on financial stability and anti‑corruption. The outcome will determine whether Kenya can harness the potential of blockchain technology without impeding the entrepreneurial energy that has made Nairobi a regional fintech hub.