Kenya cuts stablecoin issuer capital requirement 40% to $2.32 million

Kenya has lowered the minimum paid-up capital for stablecoin issuers by 40% to about $2.32 million, or 300 million Kenyan shillings, easing entry requirements while preserving a tightly controlled regulatory framework. The revised threshold, published by the National Treasury, replaces the nearly $3.9 million level proposed in draft rules last March. The change comes as crypto use expands rapidly in the East African country. Bybit’s 2025 World Crypto Ranking placed Kenya fifth globally in crypto adoption, with stablecoins widely used for cross-border payments and as a hedge against currency volatility in a market that processed tens of billions of dollars in 2024. The new regime gives the Central Bank of Kenya broad authority over stablecoin issuers and other virtual asset service providers, including the ability to restrict offshore-issued tokens by requiring local platforms to stop offering them. It also preserves strict prudential standards. At least 30% of customer funds must sit in segregated trust accounts at Kenyan commercial banks, while the rest must be invested in eligible domestic assets. Fiat-backed stablecoins must keep reserves in the same currency as their peg. Parliament’s Committee on Delegated Legislation had urged a softer local investment rule, saying it might discourage global issuers, but the Treasury kept the provision. That decision could channel more deposits into Kenyan commercial banks if overseas firms pursue local licenses. Fees and capital standards vary by business type. Stablecoin issuers and wallet providers each face a $772 application fee, but issuers must hold $2.32 million in paid-up capital versus $1.16 million for wallet providers. Issuers will also pay more than $15,400 for a license, compared with $3,860 for wallet providers. Ongoing liquidity rules are also different. Issuers must maintain $463,320 in liquid capital or 100% of current liabilities, whichever is higher. Wallet providers must hold $231,660 or the equivalent of all current liabilities for at least 30 consecutive days. The rules bar interest or reward programs linked to how long customers hold stablecoins, shutting off yield-style incentives such as loyalty bonuses. Consumer protections require every stablecoin to be fully backed 1-to-1 by eligible reserve assets, with reserves legally separated from company funds and protected from creditors if an issuer becomes insolvent. Issuers must run quarterly stress tests, submit monthly reserve and transaction reports, and redeem tokens at face value within two business days.