Grace Ashiru
Kenyan cryptocurrency startups are considering moving some operations to Mauritius and South Africa as new licensing requirements impose capital thresholds that early-stage companies say could make it difficult to remain competitive in the local market.
The concerns follow the introduction of Kenya’s Virtual Asset Service Providers Regulations, 2026, which set licensing and operational requirements for companies involved in virtual assets, including exchanges, wallet providers and stablecoin businesses. The regulations were gazetted on July 22, 2026, completing a regulatory framework established under the Virtual Asset Service Providers Act, 2025.
Under the regulations, virtual asset exchanges require minimum paid-up capital of Sh100 million, while crypto wallet providers face a Sh150 million requirement. Stablecoin issuers must have at least Sh300 million, while payment processors and crypto asset managers face requirements of Sh10 million and Sh20 million respectively.
The capital requirements are intended to ensure licensed virtual asset businesses have sufficient financial resources to operate, protect customers and absorb potential losses.
However, some startup founders argue that the thresholds could disadvantage young companies that have not yet raised substantial venture capital or built large customer bases.
The pressure is prompting some Kenyan crypto entrepreneurs to explore alternative jurisdictions, with Mauritius and South Africa emerging as potential destinations. bne IntelliNews reported that Kenyan cryptocurrency startups are considering shifting operations following the introduction of the new minimum-capital rules.
Mauritius offers lower capital requirements for several categories of virtual asset businesses. A crypto exchange operating there would require roughly Sh18 million in minimum capital, while a broker would need about Sh5.5 million and a virtual asset custodian about Sh14 million, according to reporting on the regulatory comparison. Some other categories do not face fixed minimum capital requirements and must instead demonstrate sufficient working capital.
South Africa has also developed a more established regulatory environment for crypto businesses. The country already has hundreds of licensed virtual asset service providers and in August released draft rules covering cross-border cryptocurrency transactions.
The debate presents a challenge for Kenya, which has sought to build on its reputation as one of Africa’s leading financial technology markets while introducing stronger oversight of digital assets.
Kenya passed its virtual-asset legislation in 2025 as part of efforts to establish clearer rules for the sector. The framework assigns regulatory responsibilities to institutions including the Central Bank of Kenya and the Capital Markets Authority.
The new rules come as cryptocurrency adoption continues to expand in the country. Kenya ranks 21st globally in Chainalysis’ crypto adoption index and fourth in Africa behind Nigeria, Ethiopia and South Africa, according to figures cited by Business Daily.
While regulators see stronger capital and licensing requirements as a way to improve consumer protection and financial stability, startup founders are warning that excessively high entry costs could encourage emerging crypto businesses to establish themselves in jurisdictions offering lower regulatory barriers.
The outcome could determine whether Kenya’s new regulatory framework strengthens its digital-assets market or pushes some of its home-grown cryptocurrency businesses to expand elsewhere.
