Name
Global FinTech Guide
Country _ Name
Kenya
SectionTitle
ICO/token sale
Body
Companies and projects have increasingly relied on the sale of digital assets, or tokens, as a means of fundraising. These tokens generally do not grant the holders an ownership interest in the issuing company or project, but may provide governance rights, access rights or other utility. This has been conducted through public sales known as initial coin offerings (ICOs), proliferation through token generation events (TGEs) or private sales, among other mechanisms.  While showing characteristics of traditional methods of fundraising, there are a range of unanswered questions related to the legal classifications of such products. As ICOs and TGEs will usually be distributed online and internationally, there is usually no single legal framework applying to such transaction, and the legal framework of each market in which the tokens may be offered or sold needs to be considered.

Introduction

Attitude of the country towards ICOs/token sales

The Kenyan Government, through the Capital Markets Authority (CMA) and the Central Bank of Kenya (CBK), has adopted a cautious and skeptical stance toward ICOs and token sales. In 2018, the CMA issued a public advisory cautioning investors about the risks of ICOs, highlighting concerns including:

  • Lack of investor protection mechanisms
  • High risk of fraud and market manipulation
  • Lack of regulatory oversight and disclosure standards
    • The CMA has not yet approved any ICOs or token sales in Kenya as of 2025 and continues to treat them as unregulated and high-risk. Financial institutions are generally reluctant to associate with token-related fundraising due to AML/KYC compliance risks, and mainstream banks often refuse to process crypto-related transactions.



    Legal affairs

    Presence of any explicit regulation on ICOs and the issuance of token/coins

    Currently, Kenya does not have explicit legislation that governs ICOs or token issuance.
    However, if the nature of the token falls within the definition of securities, such as investment contracts or fractional ownership in a business, then the Capital Markets Act (Cap. 485A) and CMA regulations may apply. The CMA has on multiple occasions reiterated that it will treat such tokens as securities, subject to licensing and prospectus requirements.
    Where tokens function as e-money or payment instruments, the CBK may treat them under the National Payment Systems Act, CBK Act, or the Digital Credit Providers Regulations—depending on the structure of the offering.



    Presence of any explicit restrictions on ICOs or the issuance, distribution and/or transfer of token/coins

    There are no express statutory prohibitions on ICOs or token sales in Kenya. However:

  • The CMA has not approved any ICOs, and warns that unregulated offerings may be unlawful if they involve public solicitation of investment.
  • Crypto-related advertising is scrutinized and may be flagged under the Consumer Protection Act or Capital Markets regulations if found to be misleading.


    • Obligations and requirements to issue token/coins
    There is no unified legal framework governing token issuance in Kenya.
    However:

  • Where tokens are deemed securities, issuers must comply with the Capital Markets Act, including registration, prospectus issuance, and disclosures.
  • Platforms issuing e-money-like tokens may require licensing as an E-Money Issuer (EMI) under CBK supervision.
  • Crypto-related businesses are expected to register with the Financial Reporting Centre (FRC) and implement AML/CTF programs, even if their activity falls outside direct regulation.


    • Classification of token/coins in the jurisdiction

    The legal classification depends on function:

  • Utility tokens (granting access to a product/service) are currently unregulated unless they mimic e-money.
  • Security tokens (with investment characteristics) are likely to be regulated as securities by the CMA.
  • Exchange tokens (e.g., Bitcoin) are unregulated but may be subject to AML/CTF controls.
    • The CBK treats cryptocurrencies like foreign currency for tax and exchange purposes, but does not recognize them as legal tender.



    Presence of a duty to publish a prospectus bevor offering token/coins to investors

    Where a token offering constitutes an offer of securities to the public, the Capital Markets (Securities) (Public Offers, Listings and Disclosures) Regulations, 2002 requires a registered prospectus approved by the CMA.
    Utility or non-security tokens are not currently subject to prospectus requirements—but this could change with future reforms.



    Presence of AML/KYC requirements that are needed to be fulfilled regarding (i) the initial issuance of token/coins and (ii) any following transfer of token/coins to third parties

    While there are no token-specific AML/KYC laws, any entity dealing in token issuance or transfer is expected to comply with Kenya's AML/CTF regime, including:

  • The Proceeds of Crime and Anti-Money Laundering Act (POCAMLA)
  • Registration with the Financial Reporting Centre (FRC)
  • Establishment of AML/KYC policies and suspicious transaction reporting
    • Entities facilitating token sales or exchanges may be treated as reporting institutions under POCAMLA.



    Additional comments regarding (i) the legal situation for ICOs/token/coins and (ii) any following transfer of token/coins to third parties

    The CMA's Regulatory Sandbox has admitted a few blockchain-related solutions, but no ICOs have been admitted or approved. FinTechs seeking to issue tokens should engage early with the CMA and/or CBK to pre-clear their structure and avoid unintended violations.

    Token transfers between parties, if involving regulated services (like custodianship, investment advice, or wallet provision), may trigger additional compliance requirements.



    Economic conditions

    Market size for ICOs/token sales and existence of any previous regulated ICO/token sales in the jurisdiction
    Kenya has not had any CMA-approved ICOs or token sales. The ICO market remains informal and largely underground, typically conducted via private Telegram/WhatsApp groups or foreign platforms.

    That said, interest in crypto investments remains high, especially among Kenya’s youth, and there are several local projects proposing token-based fundraising or NFT projects, albeit outside regulatory supervision.



    Additional comments regarding the economic situation for ICOs/token sales or what companies must be aware of in this business area

    The lack of regulatory clarity, combined with high retail interest in crypto, presents both opportunity and risk for FinTechs. Enforcement of consumer protection and AML laws is intensifying, so companies must avoid deceptive practices and prepare for eventual regulatory convergence with global crypto norms.

    International collaborations and regulatory sandbox participation are advisable to mitigate legal risks.

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