David Precious, Senior Market Analyst, EBC Financial Group
EBC Financial Group says new stablecoin rules give the Central Bank of Kenya powers to restrict dollar-linked digital assets — enacted while the shilling was stable
By Angela Njoki
Kenya has quietly handed its central bank a tool to limit public access to foreign dollar-linked stablecoins — and done so at a moment when the shilling faces no immediate pressure, giving regulators a legal mechanism ready to deploy if currency conditions change.
The Virtual Asset Service Providers Regulations, 2026, gazetted on 22 July under Legal Notice No. 134, contain two provisions that together give the Central Bank of Kenya sweeping authority over which digital assets Kenyans can access through licensed platforms. Regulation 60(6) bars any licensed exchange from listing a stablecoin without CBK approval and requires that it be issued by a licensed stablecoin issuer. Regulation 83 goes further, empowering the CBK to direct licensed firms to restrict access to, or trading in, any stablecoin issued outside Kenya.
The significance, analysts say, lies less in what the rules do today than in what they make possible tomorrow.
“The CBK now has the power to limit how Kenyan customers access foreign dollar-linked stablecoins through licensed providers,” said David Precious, Senior Market Analyst at EBC Financial Group, the London-founded brokerage that published an analysis of the regulations yesterday. “The important point is that this power was created while the shilling was stable, not during a currency crisis. If demand for US dollar-linked assets rises later, the CBK already has a legal route to act without waiting for another law.”
The shilling’s performance during the 2024/25 financial year supports that reading. The currency held within a narrow quarterly average range of KSh129.32 to KSh129.47 per US dollar throughout the year, with a full-year average of KSh129.37. As of 30 July, the rate remained at KSh129.40, while foreign currency reserves stood at USD15.4B — equivalent to 6.4 months of import cover, well above the statutory minimum.
Those conditions make it difficult to argue the regulations were a crisis response. They look instead like pre-emptive architecture: a framework built during calm to be used, if needed, during turbulence.
The practical mechanism is notable for what it does not require. Kenya does not need authority over an overseas stablecoin company to determine whether Kenyan customers can reach its product. Because Regulations 60(6) and 83 operate through licensed local intermediaries — exchanges, wallets, and brokers — the CBK can effectively decide local access to a foreign stablecoin without touching the issuer. A stablecoin can continue trading globally; the question is simply whether licensed Kenyan businesses are permitted to provide access to it.
The wider framework reinforces that reach. Licensed applicants under the new rules must maintain a Kenyan legal presence, a local office, and local banking arrangements — requirements that bring even foreign-based operators serving Kenyan customers within the regulatory perimeter.
The stakes are real. Kenya ranks among the five largest cryptocurrency markets in Sub-Saharan Africa, according to research firm Chainalysis. Across the region, more than USD205B in crypto value was received between July 2024 and June 2025, a rise of approximately 52 per cent on the prior year. Chainalysis identifies stablecoins specifically as instruments used across Sub-Saharan Africa for cross-border trade and as a hedge against inflation and currency weakness.
That last point has increasing relevance. Kenya’s annual inflation climbed from 4.4 per cent in January to 6.5 per cent in July 2026. A sustained rise in the cost of living historically pushes households and businesses toward dollar-denominated assets as a store of value, and stablecoins — digital tokens pegged to the US dollar — offer that exposure without requiring a conventional dollar bank account.
The regulations also adjusted the financial barriers to entry, lowering the minimum paid-up capital for a stablecoin issuer from KSh500 million set in the consultation draft to KSh300 million in the final text. Wallet providers require KSh150 million; exchanges, KSh100 million.
Precious said the capital reductions signal that Kenya still wants regulated crypto businesses operating within its borders, but cautioned that permission to operate is not the same as permission to offer every product. “The more important test is what happens if the CBK later restricts a widely used foreign stablecoin,” he said. “Kenyan customers may remain with licensed providers and accept fewer choices, or move towards offshore platforms and direct peer-to-peer trading that is harder for local regulators to monitor.”
The regulatory clock is already running. Existing virtual asset service providers must comply with the Virtual Asset Service Providers Act, 2025 by 4 November 2026 — one year after the legislation came into force. Kenya also remains under Financial Action Task Force increased monitoring, following the body’s review on 19 June 2026, adding a further layer of international scrutiny to the sector’s development.
Beyond Kenya’s borders, the framework may serve as a reference point. The East African Community is implementing a Cross-Border Payment System Masterplan aimed at closer regional payment integration and regulatory coordination. How Kenya exercises — or declines to exercise — its new CBK powers over foreign stablecoins will give neighbouring regulators a working model of how to balance a licensed digital-asset market against central-bank control of local currency exposure.
The central question is now which foreign stablecoins the CBK approves for listing, and whether Regulation 83 is ever invoked against one already in use. Those decisions will determine whether Kenya’s framework functions as a light-touch licensing regime or a more active instrument of monetary management — and whether customers stay within the regulated perimeter or seek alternatives beyond it.
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