The Kenyan Virtual Asset Service Providers (VASP) Regulations, 2026, published on July 24, prohibit licenced cryptocurrency exchanges from offering any stablecoin that has not been approved by the Central Bank of Kenya (CBK) and issued by a licenced stablecoin issuer.

The new provision, added to the gazetted version of the rules, could force offshore stablecoin issuers such as Tether and Circle to seek CBK approval and work through licenced Kenyan entities if they want their tokens to remain available on regulated Kenyan exchange platforms. It also gives the central bank direct oversight to cut off local access to foreign stablecoins without having to regulate the offshore issuers themselves.

“A virtual asset exchange shall not list any stablecoin unless that stablecoin has been approved by the Central Bank of Kenya and is issued by a duly licenced stablecoin issuer,” the policy read.

A stablecoin is a cryptocurrency pegged to the value of a real-world currency, such as the US dollar. Kenyan traders widely use tokens such as USDT and USDC to move money between exchanges, hold dollar exposure, settle peer-to-peer (P2P) trades, and access international crypto markets.

The final regulations go significantly further than earlier draft proposals, which contained only general powers that allow regulators to halt or delist stablecoin issuance. The gazetted version introduces a much more specific restriction aimed at foreign-issued tokens.

“Where a stablecoin is issued outside Kenya, the Central Bank of Kenya may exercise its powers under this regulation by directing licenced intermediaries operating in Kenya to restrict access to, or trading of, such stablecoin,” the policy read.

The move comes as regulators worldwide increase scrutiny of stablecoins following concerns about reserve backing, consumer protection, illicit financial flows, and the growing role of dollar-linked tokens in cross-border payments. The European Union’s Markets in Crypto-Assets (MiCA) framework imposes authorisation requirements on stablecoin issuers. Regulators in the United States, Singapore, and Hong Kong have also moved toward stricter oversight of fiat-referenced digital tokens.

Kenya’s approach is notable because it targets market access rather than the offshore issuer itself. The CBK would not need direct jurisdiction over Tether or Circle to affect their availability in Kenya; it could order licenced local exchanges and wallet providers to stop offering the tokens to Kenyan users.

The rules could have significant implications for local crypto businesses. Most retail trading activity in Kenya is conducted through P2P channels and dollar-backed stablecoins, which are often preferred over volatile cryptocurrencies such as Bitcoin and Ether for payments, remittances, and savings.

Under the rules, stablecoin issuers will now be required to hold KES 300 million ($2.3 million) in paid-up capital, a 40% reduction from the KES 500 million ($3.85 million) requirement proposed in the draft regulations released in March.

The lower capital threshold could make it easier for firms seeking to issue stablecoins under Kenyan regulation. However, the new rules make clear that access to foreign stablecoins in Kenya will no longer be determined solely by existing on global blockchains, but by whether the CBK permits licenced local intermediaries to continue offering them to Kenyan users.

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