New ATMs Emerge Following VASP Act Implementation
Bitcoin ATMs have been installed in major shopping malls across Nairobi shortly after Kenya's Virtual Assets Service Providers Act became effective on November 4, 2025. Machines branded "Bankless Bitcoin" were positioned alongside traditional banking kiosks in several prominent malls, providing local residents with cash-to-crypto services.
Regulatory Bodies Issue Warning on Unlicensed Operations
The Central Bank of Kenya and the Capital Markets Authority released a joint notice on November 18, cautioning that no cryptocurrency provider has yet received authorization to operate legally. Regulators clarified that neither agency has issued licenses to any Virtual Assets Service Provider (VASP) under the new legislation to conduct business in or from Kenya. Companies claiming to be authorized are operating without legal backing, according to the official statement.
Framework for Licensing Under Development
The National Treasury is currently in the process of developing the specific regulations that will govern the commencement of the licensing procedures. The VASP Act established a formal framework for licensing entities such as wallet operators, exchanges, custodians, and other cryptocurrency platforms. Under this law, the Central Bank of Kenya will oversee payment and custody functions, while the Capital Markets Authority will regulate investment and trading activities.
Significance of the Regulatory Gap for Crypto Businesses
The emergence of Bitcoin ATMs before the formal licensing procedures are in place presents immediate compliance challenges for the cryptocurrency industry. The Kenyan crypto market is reported to handle approximately $20 million in daily transactions. The new law places legal accountability on crypto firms for the prevention of money laundering and terrorism financing activities.
This situation highlights the inherent tension between the rapid deployment of cryptocurrency infrastructure and the readiness of regulatory frameworks. The installation of these machines in mainstream retail spaces while their operators lack proper authorization places both businesses and consumers in a state of legal ambiguity.
The timing of these developments is critical for Kenya's broader objectives of establishing clear oversight for the cryptocurrency sector. The VASP Act mandates stringent fit-and-proper checks for company directors, customer verification protocols, and the mandatory reporting of suspicious transactions. Without active licensing processes, these essential requirements cannot be effectively enforced against businesses that are currently operating.
Implications for the African Crypto Market
Kenya's regulatory challenges are indicative of broader trends observed across Sub-Saharan Africa's rapidly expanding cryptocurrency sector. On-chain value within the region saw a substantial surge, exceeding $205 billion between July 2024 and June 2025. As of October 2025, the region has emerged as the third-fastest-growing cryptocurrency market globally.
Kenya is now among countries like South Africa and Nigeria that are actively working to regulate digital asset platforms. South Africa officially recognized crypto assets as financial products under its Financial Advisory and Intermediary Services (FAIS) Act in 2022, allowing regulators a period to develop enforcement mechanisms. Nigeria has enacted investment and securities laws that include provisions for licensing cryptocurrency exchanges. Ghana's central bank anticipates the implementation of comprehensive crypto regulations by the end of 2025.
The situation in Kenya exemplifies how technological infrastructure can advance more rapidly than regulatory capacity. Reports indicate that Bitcoin usage has seen significant growth in lower-income areas, such as Kibera, where residents are utilizing Bitcoin as a primary banking alternative. The co-founder of AfriBit Africa, Ronnie Mdawida, has stated that Bitcoin enables residents to store value without the need for extensive documentation or banking paperwork.
This regulatory vacuum also raises significant concerns regarding consumer protection and the prevention of financial crimes. Kenya remains under the watchful eye of the Financial Action Task Force and is under pressure to modernize its financial systems. The coming months will be crucial in determining whether Kenya can transition effectively from legislation to licensing, thereby managing the cryptocurrency sector competently. The nation's approach to this challenge may establish important precedents for how other East African countries navigate the balance between fostering innovation and ensuring robust oversight.