Kenyan financial regulators, banks, and digital-asset firms convened last Thursday in Nairobi to explore how stablecoins and blockchain could be integrated into the country’s formal financial system, as policymakers finalize rules under the Virtual Asset Service Provider Act of 2025.
- •Officials and industry participants convened at the exclusive Capital Club of East Africa at a roundtable dubbed The Kenyan Wall Street: Board of Trailblazers on the sidelines of the Africa Tech Summit Nairobi.
- •The participants explored how stablecoins and blockchain could be integrated into cross-border payments, settlement, and treasury operations while maintaining compliance.
- •Unless traditional financial institutions build digital-asset capabilities, they risk losing cross-border settlement volume, custody income, and treasury services to technology platforms and offshore intermediaries.
“The integration of stablecoins and blockchain technology is no longer a peripheral fintech hobby. It is a central pillar of future cross-border payments, settlement efficiency, and financial inclusion,” said Andrew Barden, CEO of The Kenyan Wall Street.
Stablecoin providers position their technology to improve forex access, reduce friction, and accelerate international transactions in markets where dollar liquidity and conversion costs remain uneven.
The newly enacted legislation establishes licensing and supervisory regimes for exchanges, custodians, and other virtual-asset intermediaries, incorporating digital-asset firms into Kenya’s anti money laundering (AML) framework. Firms must maintain capital safeguards, implement governance controls and cybersecurity protections, and comply with oversight and enforcement from regulators.
The law marks a sharp departure from prior ambiguity, when banks largely avoided cryptocurrency activity following cautionary guidance from the Central Bank of Kenya (CBK) in 2015, even as tax authorities and lawmakers explored classifying virtual assets.
Banking representatives said the transition offers a rare opportunity to align innovation with regulatory oversight from the outset rather than retrofitting controls after adoption. Lenders are coordinating internally to avoid fragmented adoption, reflecting recognition that blockchain-based settlement, tokenized deposits, and stablecoins could reshape core banking functions, including payments and asset custody.
“The opportunity for us is to shape what we want to do and the regulations are coming with that hand in hand. Previously, the regulator would step in to put order, but now they look like they want to put an orderly start to a process,” said Fidelis Muia, Director of Technical Services at the Kenya Bankers Association.
Industry participants also said formal licensing would allow exchanges to partner directly with banks, establish regulated custody structures, and provide consumer safeguards, including dispute resolution and audited asset controls. In the absence of regulation, many Kenyan users rely on peer-to-peer channels or informal networks, exposing them to fraud, custody failures, and counterparty risks.
“For any business to operate and to provide a service, there needs to be a relationship with a banking partner. That's just how business works. Unfortunately, at this moment, that's not possible. So there's still a really big vacuum in the local market in terms of consumer protection,” said Marius Reitz, General Manager for Africa at Luno.
Licensed platforms have voluntarily adopted global best practices for compliance, transaction monitoring, and suspicious-activity reporting while awaiting domestic licensing. The discussion also emphasized lessons from South Africa, where early regulatory phases required AML/CFT registration, KYC, sanctions screening, and risk management cycles before legislation. Hybrid structures, with a core entity in a jurisdiction with legal clarity and local subsidiaries focused on compliance and regulatory engagement, have proven effective.
Several bankers admitted that corporate and high-net-worth clients are already using stablecoins for trade, treasury, and hedging outside banks. One senior banking representative noted that cautious adoption stems from the durability of traditional profit models, where lenders continue earning from FX spreads, fees, and deposit intermediation.
However, younger entrepreneurs, exporters, and tech firms increasingly adopt blockchain-based finance as their default, creating a parallel channel that could erode traditional revenue streams.
“All these innovations have their own inherent risks. The question is how do we manage them in a way that will enable innovation, inclusion, and growth of our financial structure?” James Mabuti Mutua from Tether, the largest issuer of stablecoins globally, said.
Mabuti pointed to jurisdictions like South Africa and Mauritius, where regulators amended existing laws rather than waiting for a perfect regime, allowing exchanges, custodians, and service providers to register and operate under supervision. He highlighted the “stablecoin sandwich,” in which licensed payment providers in two countries anchor customer onboarding while a stablecoin clears value between them, reducing intermediaries and foreign-exchange friction.
Apollo Sande, country manager for Luno, emphasized partnerships as the fastest path to the “sweet spot” between innovation and compliance. He cited South Africa, where Luno integrated with Discovery Bank’s consumer app to allow direct crypto purchases.
“For that to have happened, Luno must have learned what would be safe for a bank, like Discovery Bank, and Discovery Bank must have learned what would be safe and doable for a crypto platform,” Sande said.
Mabuti also urged Kenyan banks to study regional peers. Absa Group and Standard Bank support digital assets through institutional custody and stablecoin reserves, expanding client reach and creating new revenue streams from asset custody, settlement, and tokenized financial instruments. Such initiatives offer a blueprint for embedding digital assets into core banking infrastructure rather than treating them as peripheral innovations.
