By Team
Operating a virtual asset exchange in Kenya is now a licensed and highly regulated activity under the Virtual Asset Service Providers Regulations, 2026. Among all Virtual Asset Service Provider (VASP) licence categories, the exchange licence is the most demanding. This reflects the central role exchanges play in price discovery, asset listings, custody, settlement and overall market integrity.
Capital Requirements
Applicants must satisfy both paid-up capital and ongoing liquidity requirements:
- Minimum paid-up capital: KSh 100,000,000
- Minimum liquid capital: KSh 20,000,000 or 8% of total liabilities, whichever is higher
Licensing Fees
The exchange licence attracts the highest fees under the First Schedule to the Regulations:
- Application fee: KSh 100,000
- Licence fee: KSh 1,000,000
- Annual renewal fee: KSh 500,000 or 0.5% of the previous year’s gross revenue, whichever is higher
Preparing the Application
Applicants must submit the standard VASP licensing dossier, including:
- Details of directors, senior officers, significant shareholders and beneficial owners
- A comprehensive business plan
- Fit-and-proper assessments
- Evidence of the source of funds
- A description of governance, systems and internal controls
- Operational policies covering:
- Risk management
- AML/CFT/CPF compliance
- Data protection
- Cybersecurity
- Consumer protection
- Complaints handling
- Market conduct
- Conflict of interest management
- Business continuity and disaster recovery
- Evidence that the prescribed capital requirements have been met
- Audited financial statements for the previous three years
- Evidence of adequate human and technological resources
- An independent information systems audit, including a vulnerability assessment and penetration test
- Details of any cross-border operations and regulatory approvals in other jurisdictions
Unlike many other VASP categories, exchange applicants must also prepare and submit their business rules. The Capital Markets Authority must approve these rules before the exchange can operate under them.
Business Rules: The Foundation of Exchange Operations
Every licensed exchange must establish clear, fair and legally enforceable business rules that are publicly available to consumers. These rules must be supported by practical compliance procedures governing enforcement, complaints and appeals, disciplinary measures, and the detection and reporting of market abuse.
The Regulations require the business rules to address, among other things:
- Access to the trading platform
- Trading hours and procedures for operational interruptions
- Admission, suspension and delisting of virtual assets
- Investor protection measures
- Custody arrangements
- Real-time disclosure of material information
- Order submission procedures, minimum order sizes and order types
- Market data dissemination and pre- and post-trade transparency
- Prevention of market abuse and other prohibited conduct
- Investigation and inspection procedures
- Trading suspension powers
- Dispute resolution mechanisms
- Trading fees
- Account funding requirements
- Order matching methodology and priority rules
- Trade settlement and confirmations
- Deposit and withdrawal procedures
- Due diligence for admitting assets to trading
Exchanges must also maintain default management rules specifying how unsettled transactions will be handled when a participant is unable to fulfil its obligations.
Due Diligence Before Listing
Before admitting any virtual asset to trading, an exchange must conduct appropriate due diligence and determine that the asset is suitable for listing.
This assessment should form part of the exchange’s formal asset onboarding process rather than being treated as a one-time compliance exercise.
Listing Requirements
Licensed exchanges must maintain a formal register of every virtual asset admitted to trading, recording:
- Asset name
- Issuer
- Total supply
- Listing date
- Trading commencement date
A virtual asset may only be listed after achieving the minimum subscription level disclosed in its Capital Markets Authority-approved white paper.
Every listing and delisting must be reported to the Capital Markets Authority by the 10th day of the following month.
Stablecoins may only be listed where they have been approved by the Central Bank of Kenya and issued by a licensed stablecoin issuer. The Capital Markets Authority also retains the power to require the delisting of an asset where necessary to protect consumers or preserve financial stability.
Reporting Obligations
Virtual asset exchanges must submit periodic reports to the Capital Markets Authority by the 10th day of each month covering trading activity and other prescribed matters.
These reports must also disclose any approved virtual asset offering that failed to proceed to listing, together with the reasons for the failure.
Licensing Timeline and Ongoing Compliance
Once a complete application has been submitted, the regulator has 30 days to make a licensing decision.
Where a licence is granted, operations must commence within 12 months.
After licensing, exchanges remain subject to the ongoing obligations applicable to all VASPs, including:
- Periodic compliance reporting
- Complaints reporting
- Maintaining adequate human and technological resources
- Notifying the regulator of material events within two days
- Appointing a compliance officer
- Maintaining effective governance, risk management and internal controls
These obligations apply in addition to the exchange-specific requirements relating to business rules, listing governance, due diligence and periodic reporting.
Licence renewals are annual, with renewal applications and the prescribed fee due at least two months before expiry.
Key Takeaways
The virtual asset exchange licence is the most rigorous licence under Kenya’s VASP framework. It carries the highest licensing fee, one of the highest capital thresholds, and the most comprehensive operational obligations.
Prospective exchange operators should therefore view licensing from the wholesome lens and prepare accordingly before filing that application. In case you need support with this or other licences you can reach us on info@masibolaw.co.ke
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