31% of Kenyan banks ready to deal in cryptocurrency: CBK

Thirty-one percent of Kenyan banks are ready to venture into virtual assets like cryptocurrencies and non-fungible tokens (NFTs) as the government works to regulate and incentivize adoption in the growing sector.

Virtual assets are digital representations of value that can be traded, transferred, and used for payment or investment, often traded through decentralized systems like blockchain. 

A new survey by the Central Bank of Kenya (CBK) shows that commercial and microfinance banks have expressed interest in virtual assets, noting the assets' potential opportunities in enhancing financial access to the unbanked.

“… 31 percent of the respondents indicated that they were highly likely to undertake activities in the area of virtual assets,” CBK’s 2024 Innovation Survey says.

Banks pointed out that crypto and NFTs provide alternative payment and investment channels, improving transaction speed, and reducing transaction costs, CBK said.

However, the lenders highlighted their fears with the risks associated with digital currencies, such as challenges in enforcing anti-money laundering, countering the financing of terrorism, and counter-proliferation financing controls.

Others are cybersecurity risks, fraud, and high volatility.

“Most financial institutions (35 percent) emphasized the need for regulatory frameworks governing digital innovation. This includes areas such as digital lending, open banking, application programming interfaces standardization, digital identity blockchain, virtual assets including crypto assets, and digital-only banking,” the report says.

Cryptocurrency has continued to gain popularity globally in recent years. Examples are Bitcoin and Binance Coin, mostly used to preserve savings, pay for goods and services internationally, and make remittances.

But while they are still not mainstream in Kenya and banks are not allowed to deal in them, multiple researches have shown they are regularly used even without regulation.

The government has painted a huge potential for the virtual assets sector, which has an estimated four million users, according to United Nations Trade and Development (UNCTAD) figures.

Traditionally, because cryptocurrencies are not issued by any central authority, they are free from government interference or manipulation.

Unlike banks and credit card companies which verify transactions, using cryptocurrencies is seen as an easier way of transferring funds directly between two parties globally.

Additionally, one does not need to buy euros or dollars or pay to use cross-border money transfer services like Western Union.

But crypto's decentralised nature has made the sector be exploited for illegal activities like theft, fraud, and money laundering. Their prices are also very volatile and investments require accurate price monitoring.

In 2014, Kenya was included in the Financial Action Task Force’s (FATF) grey list for, among other reasons, the lack of a clear strategy for the prosecution of money laundering offences.

Another was also a failure to put in place regulatory frameworks to monitor and regulate virtual assets’ use, or banning them entirely, due to the terrorism financing risks they are associated with.

Recently, the government has moved to regulate the sector through the Virtual Asset Service Providers Bill, 2025 which requires crypto firms operating in the country to set up local offices and appoint directors subject to approval by a regulatory body such as the Capital Markets Authority (CMA).

The Kenya Revenue Authority (KRA) has additionally said it will introduce a new tax system integrating real-time crypto transaction monitoring to tap into – and catch tax cheats and criminals in – the local crypto sector.

Meanwhile, the government has sought to incentivise crypto adoption. In the 2025 Finance Bill, the National Treasury is slashing the three percent levy on digital assets trade introduced in 2023 by half to 1.5 percent.

Cabinet Secretary John Mbadi has said the reduction to the levy aims to align it with the 1.5 percent turnover tax levied on businesspeople whose gross turnover is between Ksh.1 million and Ksh. 25 million a year.

Mbadi says crypto traders have been pushing for a lower levy.