For years, cryptocurrency in Kenya has thrived in a space somewhere between innovation and regulation a fast-moving world where tech-savvy Kenyans found new ways to save, send, and grow their money outside of traditional systems.
From Bitcoin’s quiet entry into the country as a niche tech experiment, to its current role in remittances, trading, and digital entrepreneurship, crypto has become a financial lifeline for many and a growing concern for regulators.
But as of 2023, Kenya’s government made one thing clear:
Crypto is no longer a tax-free zone.
With the introduction of the Digital Asset Tax (DAT), Kenya became one of the first African countries to implement structured taxation on crypto transactions.
Now in 2025, this conversation is no longer theoretical. It’s real, active, and shaping the future of digital finance in Kenya.
In this article
Why Taxes Became Inevitable
Kenya is one of Africa’s top crypto markets, ranking high in adoption, P2P trading, and digital payments. Platforms like Yellow Card have made it easy for Kenyans to buy, sell, and store crypto assets.
- In 2023, Kenya was ranked 5th globally in crypto adoption, with over $20 billion transacted annually.
- Crypto became a hedge against inflation, a tool for cross-border remittances, and an alternative to traditional banking.
- However, regulators feared money laundering, tax evasion, and financial instability, leading to discussions about formal oversight.
As crypto became too big to ignore, the Kenya Revenue Authority (KRA) stepped in ensuring that the government gets a cut of the billions flowing through digital assets.
Understanding the Digital Asset Tax (DAT) in Kenya
What Changed?
In 2023, Kenya introduced the Digital Asset Tax (DAT) under the Finance Act 2023, marking the country’s first structured approach to crypto taxation.
- A 3% tax on digital asset transactions was implemented, affecting traders, investors, and businesses.
- This tax applies every time you sell, trade, or convert your crypto into fiat (KES).
- The tax is deducted at the source, meaning crypto exchanges and platforms must comply with KRA’s reporting rules.
Who Needs to Pay Crypto Tax?
If you’re involved in crypto in Kenya, here’s when and how taxes apply:
- Traders – If you actively buy and sell crypto for profit, you’re taxed.
- Investors – If you hold crypto and cash out later, you’re taxed.
- Businesses accepting crypto payments – If you accept crypto as payment for goods/services, you must account for taxes.
- NFT Creators & Sellers – Selling NFTs? That counts as a digital asset transaction and is taxable.
Why the Crypto Community Pushed Back
The Kenyan crypto community builders, traders, and startups did not take the DAT lightly.
Here’s why:
- Taxing the total value (not profits) makes it harder to grow wealth or build long-term
- No clear framework distinguished between traders, holders, and tech developers
- It risked driving innovation and capital offshore
As noted by Michael Kimani, Chairman of the Blockchain Association of Kenya, in a Mariblock article:
“Crypto is not just about speculation, it’s a digital economy. We need tax laws that reflect that.”
What’s Changing in 2025? The VASP Bill and Policy Shift
The Virtual Assets Chamber of Commerce (VACC), a leading Kenyan blockchain and cryptocurrency advocacy group, has formally submitted policy recommendations to the national technical working committee overseeing virtual asset regulations.
At the heart of VACC’s proposals is a call for lawmakers to align Kenya’s crypto legislation with global regulatory best practices and to reconsider the current 3% Digital Asset Tax (DAT), advocating for a more inclusive and innovation-friendly framework.
The bill includes:
- Support Innovation & Investment: Avoid overregulation and high compliance costs to attract startups and foreign investors.
- Align with Global Standards: Harmonize Kenya’s crypto laws with international frameworks for cross-border growth.
- Tiered Licensing System: Introduce flexible licensing to suit different crypto service providers and cut regulatory overlap.
- Stablecoin Clarity: Define and regulate stablecoins to drive financial inclusion and payment innovation.
- Rethink the 3% Tax: The flat Digital Asset Tax discourages growth. Tax profits, not transactions, to keep the sector alive and competitive.
Importantly, this bill is still in the public participation stage, and stakeholders like the Virtual Asset Chamber of Commerce (VACC) are calling on crypto users, startups, and developers to submit feedback and co-create policy.
How Kenya’s Crypto Tax Compares to Other African Countries
| Country | Crypto Tax Type | Applies to | Rate | Notes |
|---|---|---|---|---|
| Kenya | Transaction-based DAT | All transactions | 3% flat | VASP Bill 2025 under review |
| Nigeria | Capital Gains Tax | Profitable disposals | 10% | Applies only on gains |
| South Africa | Capital Gains Tax | Profitable disposals | Up to 18% | Crypto treated as property |
| Ghana | In review | N/A | N/A | Government seeking industry input |
| Uganda | No formal tax yet | N/A | N/A | URA considering crypto tax proposals |
Check out our article on How Africa is Regulating Crypto for a deeper dive.
How Crypto Taxes Are Impacting Kenya’s Crypto Market
Since the introduction of crypto taxation, traders, investors, and platforms have had to adjust. The impact?
The Positive Side
- Legitimization of Crypto – The government officially recognizes crypto as a financial asset.
- More Institutional Interest – With regulation, more businesses can confidently adopt digital assets.
- Increased Security – KRA’s involvement may help curb scams and fraud.
The Challenges
- More P2P Transactions – Many traders are shifting to peer-to-peer trading to avoid taxes.
- Higher Costs for Traders – The 3% deduction adds up, especially for frequent traders.
- Compliance Issues – Crypto platforms must now track, report, and deduct taxes, leading to higher fees.
Platforms like Yellow Card have had to adapt to these regulations while still providing efficient trading solutions.
What’s Next for Crypto Regulation in Kenya?
While crypto taxation is just the beginning, experts predict more changes in Kenya’s crypto laws:
- Capital Gains Tax on Crypto Profits – Future laws may tax profits separately from transactions.
- Stronger KYC (Know Your Customer) Regulations – Crypto users may need more verification processes.
- More Banking Partnerships – Kenyan banks may start integrating with crypto exchanges.
The crypto market is evolving fast, and the best way to stay ahead is to understand and comply with these regulations.
