Eric Michubu, founder of Taran App, which allows users to exchange stablecoins and other virtual assets for local currencies in East Africa, said the company would require KES100mn to qualify for a virtual-asset exchange licence.
“It could be possible to raise the funds, but it’s very difficult. The process of raising funds is complex and takes time, so for many local builders, November is not a deadline; it’s an expiry date,” Michubu told Business Daily.
Taran, along with Kenyan crypto businesses Qadi and Tando, is among companies considering Mauritius and South Africa as alternative bases, according to Business Daily. Tando, which enables users to make Bitcoin-funded payments into M-Pesa accounts, faces a KES10mn capital requirement as a payment processor.
Kenya's crypto industry had pushed back against the capital thresholds during consultations on the regulations. The Virtual Assets Chamber of Commerce proposed a tiered system based on company size and maturity, arguing that high fixed requirements risk excluding startups. The government subsequently reduced several of the proposed thresholds by as much as 40%.
Existing virtual-asset businesses have until November 4 to comply with the licensing framework, one year after the Virtual Asset Service Providers Act, 2025 came into force. The law placed wallet providers, payment processors and stablecoin issuers principally under the Central Bank of Kenya, while exchanges, brokers, investment advisers and asset managers fall under the Capital Markets Authority.
The prospect of businesses relocating highlights increasing competition among African financial centres for crypto and fintech investment. South Africa already operates an established licensing system for crypto-asset service providers, with the Financial Sector Conduct Authority saying it had licensed 310 providers by the end of March. Its licensing approach is designed to be proportionate to the risks and scale of different financial-services businesses rather than relying on the same fixed capital threshold for every operator.
Mauritius has separately operated a comprehensive virtual-asset licensing regime since 2022 under its Virtual Asset and Initial Token Offering Services Act, covering brokers, wallet operators, custodians, advisers and virtual-asset marketplaces.
Kenya nevertheless remains one of Africa's largest cryptocurrency markets. The country ranks 21st globally in Chainalysis' crypto-adoption index and fourth in Africa behind Nigeria, Ethiopia and South Africa, according to Business Daily.
The new regime was intended to provide legal certainty and consumer protection in a sector that had previously operated without a dedicated licensing framework, but the early reaction from startups suggests the rules could also influence where regional crypto companies choose to locate capital and operations.
