Kenya's National Treasury reduced the minimum paid-up capital requirement for stablecoin issuers by 40% to approximately $2.32 million (300 million Kenyan shillings), down from the nearly $3.9 million proposed in draft rules last March. The lower threshold aims to ease market entry while the Central Bank of Kenya retains strict oversight measures to protect investors as cryptocurrency adoption accelerates. Kenya ranked fifth globally in crypto adoption in Bybit's 2025 World Crypto Ranking, with stablecoins driving cross-border payments and serving as a hedge against currency volatility in a market that processed tens of billions of dollars in 2024.
Central Bank of Kenya Gains Authority Over Stablecoin Circulation
Under the new rules, the Central Bank of Kenya holds sweeping authority over stablecoin issuers and other virtual asset service providers. The powers allow the regulator to curb the circulation of offshore-issued tokens by compelling local platforms to stop offering them. This regulatory framework gives the central bank direct control over which stablecoins can operate in Kenya's market, enabling swift action against tokens deemed non-compliant with local standards.
Treasury Maintains 30% Local Reserve Requirement for Customer Funds
The framework maintains strict reserve requirements despite the reduced capital threshold. At least 30% of customer funds must be held in segregated trust accounts at Kenyan commercial banks, with the remainder invested in eligible domestic assets. Fiat-backed stablecoins must hold reserves in the same currency as their peg. Parliament's Committee on Delegated Legislation had pushed to relax the local investment rule, warning it could deter global issuers, but the Treasury kept the provision—a move that could increase deposits at Kenyan commercial banks if foreign firms seek local licensing.
Stablecoin Issuers Face Higher Fees and Capital Requirements Than Wallet Providers
Financial obligations differ across operators. Both stablecoin issuers and wallet providers must pay a $772 application fee, but issuers require $2.32 million in paid-up capital compared to $1.16 million for wallet providers. Issuers will pay over $15,400 for a license fee, four times the $3,860 fee charged to wallet providers. Additionally, issuers must maintain $463,320 in liquid capital or 100% of current liabilities, whichever is higher. Wallet providers must hold $231,660 or the equivalent of all current liabilities for at least 30 consecutive days. The regulations prohibit interest or rewards tied to how long customers hold stablecoins, effectively banning yield-like incentives such as loyalty bonuses. Issuers will instead compete on payment and settlement efficiency.
Regulations Mandate 1-to-1 Reserve Backing and 2-Day Redemptions
Every stablecoin must be fully backed on a 1-to-1 basis by eligible reserve assets, including cash, bank deposits, short-term government securities, and other central bank-approved instruments. Reserve assets must be legally separated from company funds and shielded from creditors in case of insolvency. Issuers must conduct quarterly stress tests, file monthly reserve and transaction reports, and ensure customers can redeem tokens at face value within two business days.
FAQ
What is Kenya's new minimum capital requirement for stablecoin issuers?
Kenya's National Treasury reduced the minimum paid-up capital requirement for stablecoin issuers by 40% to approximately $2.32 million (300 million Kenyan shillings), down from nearly $3.9 million proposed in draft rules last March.
What reserve requirements must stablecoin issuers meet in Kenya?
Stablecoin issuers must hold at least 30% of customer funds in segregated trust accounts at Kenyan commercial banks, with the remainder invested in eligible domestic assets. Every stablecoin must be fully backed on a 1-to-1 basis by eligible reserve assets, and customers must be able to redeem tokens at face value within two business days.
How do licensing fees differ between stablecoin issuers and wallet providers in Kenya?
Both stablecoin issuers and wallet providers pay a $772 application fee, but issuers pay over $15,400 for a license fee—four times the $3,860 fee charged to wallet providers. Issuers require $2.32 million in paid-up capital compared to $1.16 million for wallet providers.
