Kenya is tightening control over stablecoin issuance, setting strict reserve, capital, and disclosure rules designed to keep digital currency value, data, and oversight firmly onshore.
Under draft Virtual Asset Service Providers Regulations published by the National Treasury in March, any firm issuing a stablecoin to the public in Kenya must hold local fiat-backed reserves in high-quality liquid assets at all times. At least 30% of customer funds backing a stablecoin must sit in segregated accounts at commercial banks domiciled in Kenya, with the remainder limited to cash or government securities maturing in 90 days or less. Reserves must be kept separate from the issuer’s own funds, free from third-party claims, and always available for redemption at par value on demand.
Issuers are banned from paying interest or yield on stablecoins, including indirect yield routed through other licensed virtual asset businesses. The ban targets yield-bearing products that have driven much of global stablecoin adoption.
To operate, stablecoin issuers “in or from Kenya” must hold at least KES 500 million ($3.85 million) in paid-up capital, with core or liquid capital of KES 100 million ($773,700) or 100% of current liabilities for at least 30 days, whichever is higher. The rules also require recurring proof-of-reserves checks, annual independent reviews, and robust internal controls. Boards of directors are held accountable for the accuracy of disclosures, and issuers must file updates with regulators and include clear warnings that these products are not covered by investor compensation schemes.
A newly proposed “Coordination Committee,” chaired by the National Treasury and including the Central Bank of Kenya, Capital Markets Authority, Financial Reporting Centre, Asset Recovery Agency, Directorate of Criminal Investigations, National Intelligence Service, Nairobi International Financial Centre, National Computer and Cybercrimes Coordination Committee, Communications Authority of Kenya, and National Counter Terrorism Centre, will oversee supervision, share information, and coordinate enforcement across agencies.
Kenya’s approach mirrors moves in the United States and European Union to tighten stablecoin standards without banning them. The US Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act requires 100% reserves in liquid assets and regular public disclosures. EU Markets in Crypto-Assets (MiCA) rules require smaller stablecoins to hold at least 30% of reserves at commercial banks, with “significant” stablecoins holding 60% or more. Kenya’s proposal echoes these trends on full backing and bank deposits but goes further by tying a fixed slice of reserves specifically to Kenyan banks and assets, and by banning yield outright.
The rules aim to encourage well-capitalized, heavily scrutinized stablecoin issuers with fully backed, segregated reserves available for redemption. However, high capital and compliance demands risk pushing smaller issuers—and much of the informal mix of digital tokens circulating in Kenya today—out of the licensed market, narrowing the range of digital tokens accessible through regulated channels.
Global stablecoin supply stood at $320.1 billion as of March 2026, with US dollar-linked coins making up 99.76% of that supply. African currencies account for a combined $665,300 in stablecoin value—well below 1%—with South Africa leading at roughly $426,400 in rand-linked coins, Kenya at around $145,300, Nigeria at about $67,800, and Ghana at roughly $25,800. On-chain stablecoin transactions in Africa fell 41% year-on-year in early 2026, suggesting cooling activity even as regulators tighten rules.
Yield-bearing stablecoins, which attract traders and long-term holders seeking returns above cash or basic bank accounts, have a market capitalization of $303 billion and represent 9% of the stablecoin market. Realistic yields typically range from 2% to 6% annually, with riskier products offering up to 12% annual percentage yield.
Kenya’s draft rules pose a dilemma: how much experimentation is it willing to give up in return for more safety and control? If passed as proposed, the country is likely to have a small group of domestically anchored, transparently backed coins under close committee oversight, but far less room for the high-yield, higher-risk tokens that currently populate the market.
