Kenya Finance Bill 2026 crypto regulations drew sharp pushback from the country’s blockchain sector this week. Local firms say the numbers inside the draft framework could push smaller players out before they even clear the licensing gate.
Those concerns surfaced during the fourth Kenya Blockchain and Crypto Conference 2026, held in Nairobi on May 14 and 15. Over 1,500 industry players, fintech executives, and regulators gathered under the theme: Stablecoins, Payments and the Next Phase of Africa’s Digital Economy.
The Number Stopping Local Firms Cold
The draft Virtual Asset Service Providers framework includes proposed licensing capital requirements. For crypto exchange operators, some categories would require holding up to Ksh.500 million in reserves.
Felix Macharia, CEO of Gotani Pay, said the industry accepts that taxation is not optional. The problem, he argued, is a framework that lets international players with larger financial backing walk in while Kenyan startups wait outside.
“We expect to be taxed. That is not up for debate. What we are looking at is balanced regulation between global players and local players,” Macharia said at the conference.
High capital thresholds, he warned, would concentrate the market in the hands of foreign firms rather than building local industry.
Kevin Kigima, Chief Commercial Officer at Yogupay, put a name on the provision he considers the central issue. The proposed introduction of VAT on payment service provider and merchant service fees, he said, is the bill’s biggest problem for fintech firms.
“The major elephant in the room is the proposed introduction of VAT to payment service provider and merchant services agreements,” Kigima said.
Those costs will not stay inside the companies. They move downstream to consumers and businesses, Kigima said, putting Kenya’s position as a regional digital payments hub at risk if transaction costs rise above competing markets.
This pushback comes as the bill moves through parliament. CryptoNewsLive previously reported on the Finance Bill 2026’s broader crypto provisions, including mandatory KRA reporting requirements and the 10% excise duty on transaction fees that exchanges collect from users.
When Stablecoins Hit a Compliance Wall
Cross-border payments came up repeatedly at the conference as an area where Kenya has real commercial opportunity. Traditional remittance routes remain slow. Apollo Sande of Luno told attendees that some transactions still take three days to settle because of the number of intermediaries in the chain.
Blockchain-based payment systems and stablecoins cut through that friction, Sande said, particularly for businesses managing regional trade and multi-currency flows.
As Money Academy KE posted on X, stablecoin firms in Kenya are already feeling the regulatory shift. The account noted the government has moved from drafting rules to enforcing them, with firms now required to obtain licenses, meet banking standards, and secure insurance before operating.
Dave Evans of PowerPay said Kenya, Nigeria, and South Africa are emerging as key virtual asset markets across the continent. Inconsistent regulations between African countries keep compliance costs high and slow adoption of digital payment technologies, he added.
The stablecoin payments conversation connects to a broader shift already underway in Kenya’s banking sector. Earlier this year, CryptoNewsLive covered the entry of the USDA stablecoin into Kenya’s banking system, with Credit Bank PLC and Anzens targeting flat 1.5% cross-border fees pending CBK approval. That development showed how quickly stablecoin infrastructure is moving into regulated Kenyan banking, even as the policy framework is still being written.
Regulators Are Watching Every Function
Both the Central Bank of Kenya and the Capital Markets Authority attended the conference. Michael Eganza, Director of Banking and Payment Services at the CBK, said regulators are focused on what digital tokens actually do rather than the technology stack behind them. His framing was deliberate.
Eganza compared stablecoin mechanics with Kenya’s existing mobile money infrastructure, pointing to similar wallet structures and fiat-backed token systems. His position on cost reduction claims from the crypto sector was cautious. Lower transaction costs through stablecoins, he said, are harder to prove once foreign exchange conversion and off-ramp expenses are included.
Justus Agoti, Deputy Director for Market Deepening at the Capital Markets Authority, said regulators want direct engagement from companies building in this space.
That signals an open door. The industry says the window may close fast if capital thresholds and tax burdens inside the bill are not revised before it passes.
Conference organiser Sheila Waswa said the 2026 edition focused specifically on stablecoin payments, compliance readiness, and Kenya’s potential as a regional blockchain innovation hub. Engagement with the CBK and the CMA is ongoing, she said, aimed at building a framework that protects consumers while leaving room for investment and growth in the sector.
The Finance Bill 2026 was published on May 5, 2026, and is currently under parliamentary scrutiny. Under proposed amendments to the Tax Procedures Act, virtual asset service providers would file annual returns with the KRA showing user names, transaction histories, and wallet activity. Between July 2024 and June 2025, Kenyans received approximately $19 billion in cryptocurrency inflows, per Chainalysis data. The scale of that activity is exactly why both sides of this debate say getting the rules right matters.
