A new report by the Central Bank of Kenya (CBK) shows that nearly one-third of banks in Kenya are keen on entering the virtual assets space, including cryptocurrencies and non-fungible tokens (NFTs), as the government strengthens efforts to regulate and support the sector.
According to CBK’s 2024 Innovation Survey, 31 percent of commercial and microfinance banks indicated they are “highly likely” to explore activities in virtual assets, citing their potential to boost financial inclusion, particularly among the unbanked population.
Virtual assets are digital representations of value that can be traded or used for payments and investments. They often operate on decentralized platforms like blockchain and include popular cryptocurrencies such as Bitcoin and Binance Coin.
Banks view these assets as alternatives to traditional payment and investment options, offering faster transactions and lower costs. However, they also raised concerns about associated risks, including cybercrime, fraud, high price volatility, and weak controls against money laundering and terrorism financing.
“Most financial institutions—35 percent—called for strong regulatory frameworks for digital innovation,” CBK stated. These include rules on open banking, digital lending, digital identity, APIs, blockchain use, and virtual assets.
Though not officially permitted to handle cryptocurrencies, many Kenyans already use them informally. The United Nations Conference on Trade and Development (UNCTAD) estimates that around four million Kenyans have engaged in crypto-related activities.
The decentralized nature of crypto allows users to bypass traditional financial systems, enabling direct global transfers without intermediaries like banks or remittance services. However, this freedom has also made the sector vulnerable to criminal exploitation.
Kenya was placed on the Financial Action Task Force (FATF) grey list in 2014, partly due to gaps in monitoring virtual assets and prosecuting financial crimes.
To close those gaps, the government has introduced the Virtual Asset Service Providers Bill, 2025, which will require crypto firms operating locally to register offices in Kenya and have their directors approved by regulators such as the Capital Markets Authority (CMA).
The Kenya Revenue Authority (KRA) also plans to implement a real-time crypto transaction monitoring system to tighten tax compliance and curb illicit activity.
In a bid to encourage compliance and growth in the sector, the government has proposed cutting the digital asset tax introduced in 2023. The 2025 Finance Bill seeks to slash the current three percent levy on crypto trading to 1.5 percent—bringing it in line with turnover tax rates for small businesses.
Treasury Cabinet Secretary John Mbadi said the adjustment follows pressure from crypto traders, who have been lobbying for a fairer tax regime to support the sector’s growth.
