Kenya: CMA weighs investor protection framework for crypto users after VASP Act rollout

Kenya’s Capital Markets Authority says it is considering a dedicated compensation mechanism for virtual asset investors, aiming to reduce losses if a licensed crypto dealer fails to meet contractual obligations.

The Capital Markets Authority (CMA) is working on proposals to minimise risks in Kenya’s fast-growing virtual assets market by exploring a special fund that could compensate investors when a licensed virtual-asset dealer collapses or defaults. CMA chief executive Wycliffe Shamiah said the idea is under discussion and would be designed specifically for virtual asset investors, rather than folded into existing market compensation structures.

Shamiah told The EastAfrican that the regulator is looking at “layers of protection” appropriate for virtual assets and expects any compensation arrangement to be separate from the Investor Compensation Fund (ICF), which currently applies to licensed brokers and dealers in the equities market. Kenya’s capital markets rules cap compensation from the Compensation Fund at KSh 200,000 per investor, underscoring why CMA sees virtual assets as a distinct risk category requiring its own design choices and funding model.

The push comes as Kenya’s virtual assets regime moves from policy into implementation. The Virtual Asset Service Providers Act, 2025 (Act No. 20 of 2025) was assented to on 15 October 2025 and commenced on 4 November 2025, creating the legal basis for licensing and supervision of virtual asset service providers (VASPs). Against that backdrop, CMA says details of any new compensation fund — including who pays into it and how claims would work — are still being debated.

CMA is also framing the discussion as part of a broader “market-deepening” agenda. The EastAfrican reported that the regulator has been in talks with several major virtual asset companies (mainly from the US and UK) about potential listings on the Nairobi Securities Exchange, which would expand the number of crypto-adjacent products available to local investors.

If CMA proceeds, the key question for the market will be how Kenya balances confidence-building protection with practical guardrails — eligibility rules, funding sources, and limits — so the framework supports growth without encouraging excessive risk-taking by intermediaries or investors.