IMF Identifies Identity-Sharing Gap in Kenya’s New Cryptocurrency Regime

Kenya may have to tighten its recently established cryptocurrency regulations after the International Monetary Fund identified a significant gap in the rules governing the transfer of customer information between virtual-asset businesses. In a technical-assistance report published on November 6, the IMF said Kenya’s emerging regulatory framework was generally aligned with international standards but contained important shortcomings. The review was conducted at the request of the Central Bank of Kenya and involved the Capital Markets Authority and Financial Reporting Centre.  The most immediate issue is the absence of an explicit “Travel Rule”, the Financial Action Task Force standard requiring financial or virtual-asset businesses to transmit identifying information about the sender and beneficiary when processing a transfer. Kenya’s regulations require virtual-asset service providers to maintain customer and transaction records. However, the IMF found that the framework does not clearly oblige a provider to send the required originator and beneficiary information securely and immediately to the receiving platform or financial institution.  That distinction is important. Keeping records gives regulators information that can be requested after a transaction. The Travel Rule is designed to make identifying information move with the transaction, enabling the receiving institution to conduct sanctions screening, identify suspicious activity and report potential financial crime. The IMF has recommended incorporating the obligation into the Virtual Asset Service Providers Regulations or another binding legal instrument. This is a recommendation rather than a rule already adopted by Kenya. Kenya’s Virtual Asset Service Providers Act took effect in November 2025 and prohibits companies from conducting covered virtual-asset activities in or from Kenya without a licence. The framework assigns supervisory responsibilities to the Central Bank and Capital Markets Authority, with the final regulations listed by the CMA in July 2026.  The law marked a major change from Kenya’s previous reliance on warnings and general financial legislation. It created a formal route for exchanges, wallet operators, stablecoin businesses and other service providers to enter the regulated economy. Closing the Travel Rule gap would strengthen that framework, but it would also raise compliance costs. Providers would need interoperable systems for identifying customers, screening transfers and exchanging sensitive data securely. Smaller operators may face pressure to consolidate, outsource compliance or withdraw from regulated services if those systems prove too expensive. The commercial stakes are considerable. Chainalysis estimates cited by Business Daily put the value of crypto assets transferred by Kenyans at KSh740 billion, or about $5.7 billion, in the year to June 2026. The figure is a private-sector estimate rather than an official measure, but it illustrates the scale that regulators are attempting to bring under supervision.  Stablecoins are especially relevant because businesses and individuals increasingly use them for cross-border payments, imports, remittances and protection against currency depreciation. A more credible regulatory framework could eventually make these services easier to connect with banks and licensed payment providers. Poorly designed requirements, however, could push more activity into peer-to-peer channels that are harder to supervise. There is also a data-protection question. Transmitting names, identification numbers, account references and wallet addresses across platforms creates new cybersecurity and privacy risks. Any amendment will need to specify which information must be exchanged, how it should be protected, how long it may be retained and when it can be shared with the Financial Reporting Centre. The issue carries wider reputational significance because Kenya has remained on the FATF grey list since February 2024. Demonstrating that crypto transfers are subject to effective anti-money-laundering controls could support the country’s efforts to address weaknesses identified by international assessors. The next step rests with the National Treasury, Central Bank and Capital Markets Authority. Businesses should watch for an amendment, regulatory circular or implementation guidance establishing the Travel Rule, alongside clarity on enforcement, cross-border data exchange and treatment of transfers involving unhosted wallets.