The Legal & Regulatory Framework for Capital Raising via Digital Assets in Kenya: A Founder's Guide
CMA and CBK jurisdiction, SAFTs, SPVs and AML compliance for token-based capital raises.
Read insight →Under the VASP Act and the 2026 Regulations, conducting an initial coin offering, or more broadly a virtual asset offering, is treated as a distinct licensed activity, generally sitting with the Capital Markets Authority. Founders planning a token launch should build their timeline and documentation around this licensing requirement from the outset, rather than treating it as an afterthought to technical development.
What the framework covers
The Virtual Asset Offering Provider category captures businesses that structure and offer virtual assets to the public or to a defined class of investors, whether structured as an initial coin offering, a broader token sale, or a token issuance platform offering. The classification exercise looks at the substance of what is being offered and to whom, not at the label used in a whitepaper.
Disclosure expectations
An offering should be supported by disclosure documentation that sets out, in plain terms, what the token represents, the risks associated with the offering, the team and governance behind the project, and how proceeds will be used. Where the token carries investment characteristics, this disclosure sits alongside, and may need to satisfy, the public-offer requirements under capital markets law discussed in our capital-raising guide.
Governance and use-of-proceeds expectations
Regulators reviewing an offering are likely to expect clear governance around how offering proceeds are held, and safeguards against founders unilaterally moving or spending investor funds ahead of committed milestones. Escrow arrangements, staged fund releases tied to development milestones, and independent oversight of treasury management all strengthen an offering's credibility with both regulators and investors.
Where ICO regulation intersects with securities law
The old assumption that "utility tokens are unregulated" should not be relied on without a specific legal review. If the token's actual rights or the way it is marketed carry investment characteristics, the offering may also need to satisfy securities-law public-offer or exemption requirements, independent of the VASP offering-provider licence itself. The two analyses run in parallel, not as alternatives.
Ongoing obligations after the offering
Licensed offering providers should expect continuing obligations around reporting to token holders, maintaining the disclosures made at the time of the offering, and notifying the regulator of material changes to the project or its governance after tokens have been issued.
Planning a token launch or ICO?
We review your offering structure, disclosure documents and use-of-proceeds governance before you go to market.
Discuss Your Token OfferingKey legal & regulatory sources
- Kenya Law — Virtual Asset Service Providers Act, 2025 (Act No. 20 of 2025)
- Kenya Law — Virtual Asset Service Providers Regulations, 2026 (Legal Notice No. 134 of 2026)
- Central Bank of Kenya and Capital Markets Authority public guidance on VASP licensing
Frequently asked questions
Is a 'utility token' exempt from ICO regulation in Kenya?
Not automatically. Classification depends on the token's actual rights and how it is marketed, not on the label used. A token marketed with profit expectations or investment characteristics may fall within securities law regardless of a utility label.
Do I need a licence to run a token airdrop with no fundraising?
A genuine airdrop with no consideration paid by recipients and no investment characteristics sits differently from a paid token sale, but the specific structure should be reviewed, since some airdrop models are designed around, and may still fall within, offering rules.
Can offering proceeds be held directly by the founding team?
Regulators are likely to view escrow arrangements or staged, milestone-linked fund releases favourably over unrestricted founder control of offering proceeds, both for investor protection and for the strength of the application.
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Kenya VASP Licensing & Compliance Resource Centre
The central hub for licence categories, CBK/CMA jurisdiction, costs, AML and the transition deadline.
Read insight →The information on this website is general in nature, is not legal advice, and does not create an advocate-client relationship. Figures, fees, capital thresholds and procedural requirements under the Virtual Asset Service Providers Act, 2025 and the Virtual Asset Service Providers Regulations, 2026 should be confirmed against the current Gazette text and regulator guidance before action is taken. Please contact Njau & Associates Advocates for advice on your specific circumstances.