Kenya has emerged as one of the world’s leading digital asset markets, ranking 28th globally in adoption. According to the 2025 Yellow Card Regulatory Report, Kenya ranks fourth in Africa even as the country faces growing tension between ambitious regulatory reforms and a transaction-based tax regime that industry players warn could stifle innovation.
Nigeria, with an estimated 25.9 million users of digital assets (a penetration rate of 11.9%), is the world’s second-largest adopter of digital assets.
The ranking also places Kenya (28th) alongside other African peers, such as Ethiopia (26th), Morocco (27th), South Africa (30th), Uganda (34th), Algeria (43rd), Egypt (44th), Ghana (46th), and the Democratic Republic of the Congo (48th).
The report situates Kenya’s performance within a wider continental surge, noting that Sub-Saharan Africa now records the highest stablecoin adoption rate globally at 9.3%.
Across the continent, more than 54 million people are estimated to use digital assets, driven largely by cross-border payments, access to U.S. dollars, and hedging against local currency volatility.
Kenya ranked among world’s top crypto markets
In East Africa, Kenya is identified as a key driver of this momentum. Its mature fintech ecosystem and widespread use of mobile financial services have helped embed digital assets—particularly stablecoins—into everyday economic activity, moving them beyond speculative use and into practical payment and settlement functions.
“This progressive development reflects a growing recognition of the use of stablecoins and other digital assets as a payment mechanism in Africa, thus bridging the existing gap between digital assets and established national payment systems. The Kenya government has also made clear that stablecoins will be regulated in the ecosystem,” the report reads.
Also Read: New Cryptocurrency Rules Take Effect as Kenya Prepares for Licensing of Virtual Asset Providers
The Yellow Card report also classifies the country among those with a “developing regulatory framework,” alongside nations such as Ghana and Uganda.
However, it notes that Kenya has gone further than most peers in advancing comprehensive draft legislation governing digital assets.
In January 2025, the National Treasury and Economic Planning published the draft National Policy on Virtual Assets and Virtual Asset Service Providers together with the draft Virtual Asset Service Providers (VASP) Bill, 2025.
The bill was subsequently gazetted on March 17, with parliamentary debate and voting expected by mid-2025.
If passed, the legislation would introduce a structured regulatory framework for the sector and formalise oversight by two key agencies: the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA).
“Although the digital assets tax has thus been effective since September 1, 2023, the Kenya Revenue Authority has not yet published any regulations or guidelines related to its implementation and is currently engaged in a constructive dialogue with various industry participants regarding the adoption of a logical reconstruction of the digital assets tax in the 2025 Finance Act.”
This dual-agency model marks a decisive shift from years of regulatory caution, including public warnings issued by authorities in 2015 discouraging engagement with virtual currencies.
Licensing category for digital asset payment
The bill also establishes a dedicated licensing category for digital asset payment processing under the CBK. According to the report, this provision reflects how digital assets are already being used in Kenya’s economy, particularly stablecoins pegged to the U.S. dollar.
The report highlights that stablecoins in Kenya are increasingly used for cross-border payments, accessing U.S. dollars, and hedging against shilling volatility.
By explicitly recognising digital assets as a legitimate means of payment, the proposed law seeks to bridge the gap between decentralised digital finance and Kenya’s established national payment system.
Also Read: Digital Asset Company Tether Invests in Kotani Pay to Transform Africa’s Crypto
However, the report warns that legislative progress could be undermined by Kenya’s current tax policy on digital assets.
Under the Finance Act, 2023, a 3% tax is levied on the gross value of every digital asset transaction, including purchases, sales, transfers, and exchanges, with the tax deducted at source by exchanges.
The report describes the levy as “punitive,” noting that it is based on transaction volume rather than actual income or capital gains. It likens the structure to taxing a securities trade regardless of whether the investor makes a profit.
According to the analysis, the tax risks make it economically unviable for virtual asset service providers to operate in Kenya and could discourage participation in the formal, regulated market.
The tax also affects remittances, a key use case for digital assets in Kenya. The report notes that many users rely on crypto-based payments to move money across borders at lower cost, meaning the transaction tax can amount to a double levy on funds that have already been subject to income taxation.
Follow our WhatsApp Channel and X Account for real-time news updates.
