Main Points：
- Potential Regulatory Capture: The VASP Bill may grant the Binance-linked Virtual Asset Chamber of Commerce (VAC) outsized influence over Kenya’s crypto regulations.
- Financial Ties Raise Transparency Concerns: VAC reportedly receives $6,000/month from Binance for policy advocacy, yet Binance is not listed among VAC’s public partners.
- Fair Competition at Risk: Local startups warn that VAC’s presence on the oversight board could skew rules in favor of Binance, undermining homegrown innovation.
- Call for Inclusive Governance: Stakeholders urge involvement of the Central Bank of Kenya (CBK), Capital Markets Authority (CMA), National Treasury and civil society to balance interests.
- Crypto Adoption Surges: Kenya ranked 28th globally on the 2024 Chainalysis Global Crypto Adoption Index, with transaction volumes doubling year-over-year, underscoring the need for robust, transparent regulation.
Background of Kenya’s VASP Bill
In June 2025, Kenya’s Parliament debated the Virtual Asset Service Providers (VASP) Bill, designed to establish a comprehensive framework for licensing and supervising crypto platforms. The draft law would form the Virtual Assets Regulatory Authority (VARA), comprising representatives from government agencies—National Treasury, CBK, CMA, Communications Authority—and one private-sector nominator: the Virtual Asset Chamber of Commerce (VAC). Critics argue that granting a private entity a formal role on the oversight board is unprecedented and risky for market integrity.
Role of VAC and Binance’s Financial Ties
VAC, a private think tank, has been active in policy dialogues with the International Monetary Fund, CBK, and Parliament for two years. However, reports indicate Binance pays VAC $6,000 per country each month under a “policy advocacy” contract, raising questions about VAC’s independence and potential conflicts of interest . Despite this retainer, Binance is conspicuously absent from VAC’s publicly disclosed partners list, fueling skepticism over undisclosed influence.
Concerns Over Regulatory Capture and Market Fairness
Several Kenyan startups have voiced strong opposition. One stakeholder told The Kenyan Wall Street:
“All regulation convos by VAC that happened recently have been sponsored by Binance. Then VAC… ‘magically’ gets a regulatory seat? How is this fair? How is this constitutional?”
Critics warn that VAC’s dual role—as Binance’s paid consultant and regulator nominator—could skew rule-making to benefit an industry giant, sidelining emerging local exchanges and stifling competition. Some even caution that such conflicts could impede Kenya’s efforts to exit global “grey lists” for anti-money laundering compliance.
Government Oversight and Calls for Inclusive Governance
Proponents of the bill stress that the VASP framework also mandates seats for the National Treasury, CBK, CMA, a lawyer, and an accountant, aiming for a diversified oversight body. VAC’s director, Basil Ogolla, defends the organization’s inclusion, citing its track record of meaningful engagement and the National Assembly’s confidence. Yet, many believe additional measures are needed:
- Transparent Disclosures: Full public listing of VAC’s sponsors and partners.
- Broader Stakeholder Input: Formal consultation with civil society and smaller crypto firms.
- Rotating Nominators: Limit any single private entity’s tenure to prevent entrenched influence.
Such steps, they argue, are essential to ensure the regulatory environment fosters innovation and protects market integrity.
Kenya’s Crypto Adoption Trends and the Stakes at Play
Kenya has emerged as a leading crypto adopter in Sub-Saharan Africa. According to Chainalysis, the country ranked 28th globally in 2024—up from 32nd in 2023—among 151 nations surveyed. Transaction volumes on peer-to-peer platforms surged by 100% year-over-year, the largest increase globally outside Asia, reflecting grassroots demand for digital assets in remittances, savings, and merchant payments.
This rapid growth highlights why sound regulation matters: poorly designed frameworks could either drive innovation forward or push it into unregulated underground channels, increasing systemic and compliance risks.
Recent Developments and Next Steps
- Second Reading Passed: The VASP Bill passed its second reading on June 25, 2025, moving to committee review.
- VAC Defense: VAC emphasizes its impartial consultative history and IMF collaborations.
- International Watch: Global bodies, including the Financial Action Task Force (FATF), are monitoring Kenya’s regulatory evolution for lessons on public-private collaboration.
- Local Pushback: Crypto startups continue to lobby MPs for amendments ensuring balanced governance.
As Kenya charts its course, the challenge is clear: craft a VASP framework that leverages expertise without sacrificing fairness.
Conclusion
Kenya stands at a pivotal juncture in its digital asset journey. The proposed VASP Bill promises a structured regulatory landscape, but the inclusion of Binance-linked VAC raises valid concerns of capture and fairness. Striking the right balance—through transparent disclosures, inclusive stakeholder engagement, and diversified oversight—will be crucial for nurturing a competitive, innovative crypto ecosystem. With grassroots adoption soaring, Kenya has a unique opportunity to set regional standards for responsible, growth-oriented crypto regulation.
