REGULATION | IMF Reportedly Urges Kenya to Ease Stablecoin Reserve Rules, Reconsider Crypto Capital Requirements

The International Monetary Fund (IMF) has urged Kenya to reconsider parts of its new cryptocurrency regulatory framework proposing that foreign-denominated stablecoin issuers be allowed to hold reserves abroad rather than being required to maintain part of their backing assets locally.

The proposal could benefit global issuers of dollar-backed stablecoins such as Tether’s USDT and Circle’s USDC which currently face requirements to maintain a portion of their reserves in Kenya.

The IMF argues that forcing foreign issuers to hold reserves in Kenyan banks could discourage them from establishing local subsidiaries leaving customers to access their stablecoins through offshore platforms outside direct domestic regulatory oversight.

It recommends allowing reserves to remain in issuers’ home jurisdictions or with foreign custodians subject to strict conditions on fund transfers and regulatory supervision. Kenya could, in exchange, restrict the use of foreign-denominated stablecoins by regulated domestic financial institutions.

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The Fund is also calling for a review of minimum capital requirements for crypto businesses arguing that the rules should reflect the size, complexity, and risks of individual operators rather than impose static thresholds.