The International Monetary Fund has urged Kenya to revisit two core elements of its virtual‑asset licensing regime: the mandate that stablecoin issuers hold part of their backing assets within the country and the use of uniform capital minimums for all digital‑asset firms.

Under the Fund’s proposal, providers of foreign‑denominated stablecoins such as USDT and USDC could keep their reserves in their home jurisdictions or with foreign custodians, provided strict transfer and supervisory conditions are applied.

The IMF also suggests that capital requirements be calibrated to the size and complexity of each digital‑asset business rather than applying fixed thresholds of Sh100 million for exchanges and Sh300 million for stablecoin issuers.

Kenya is currently implementing its Virtual Asset Service Providers (VASP) Act and related regulations, which set licensing and supervisory standards for exchanges, stablecoin issuers and other virtual‑asset service providers.

Local industry participants have expressed concern that the existing capital thresholds strain smaller operators, prompting some to explore relocation to jurisdictions such as South Africa or Mauritius.

The Fund argues that allowing reserve localisation abroad would lower entry barriers for international issuers while still enabling Kenyan regulators to monitor domestic usage, especially by regulated financial institutions.

Kenya’s cryptocurrency market has grown rapidly, with transactions worth Sh740 billion ($5.7 billion) recorded up to June 2026 – a 38 % increase from the previous period – positioning the country as Africa’s third‑largest crypto economy.

Stablecoins play a notable role in this expansion, facilitating cross‑border payments and dollar‑linked digital transactions beyond traditional cryptocurrency trading.

In addition to reserve and capital recommendations, the IMF’s November 10 proposals address the implementation of the FATF Travel Rule, seeking to improve transaction monitoring across virtual‑asset service providers.