Kenya’s newly enacted Virtual Asset Service Providers (VASP) law has brought long awaited structure to the country’s fast-growing cryptocurrency industry but the real policy shift has come on the taxation side.
Under the Finance Act 2025, the controversial Digital Asset Tax (DAT) — previously set at three per cent on the transaction value of virtual assets has been repealed.
In its place, the government has introduced an excise duty on fees and commissions charged by licensed crypto platforms, aligning Kenya’s approach with global best practices.
The change means crypto exchanges and brokers will now pay excise duty on the service fees they charge users, rather than on the total value of digital asset trades.
For individuals and companies, income tax or capital gains tax will still apply depending on whether the virtual assets are held, traded, or received as payment for services.
According to industry players, the update marks a step toward greater clarity in an industry that has long operated in a regulatory grey zone.
GoChapaa, one of the startups operating in the space says that taxation has always been a key concern for digital asset players.
“The repeal of the Digital Asset Tax and the introduction of excise duty on service fees is a more practical and fair approach it recognises how our business models actually work,” said GoChapaa’s chief marketing Officer Philip Chege in an interview with The Star.
Chege added that the blockchain industry, recently participated in a roundtable discussion with the Kenya Revenue Authority (KRA) through industry lawyers to help shape the new framework.
“It was encouraging to see open dialogue between regulators and industry stakeholders. That kind of collaboration is what will move this space forward,” he said.
The VASP Act, which came into force this year, requires all crypto platforms operating in Kenya to register with the Central Bank of Kenya (CBK), maintain physical offices, conduct Know Your Customer (KYC) checks and have Kenyan representation on their boards.
The law also enforces strict anti-money laundering and counter-terrorism financing obligations, aligning Kenya’s regime with standards set by the Financial Action Task Force (FATF).
Analysts say the latest policy reforms are part of a broader effort to formalise oversight of digital finance while ensuring fair revenue collection.
Kenya ranks among Africa’s top crypto markets third overall in usage and first in peer-to-peer transaction volumes, according to data from Chainalysis.
He however, says that while the tax clarity is welcome, implementation details will still depend on how the CBK and the Capital Markets Authority (CMA) coordinate on licensing and reporting procedures.
“Kenya has a chance to lead in building a fair, transparent digital asset ecosystem,” Chege said. “With taxation and regulation now taking shape, we can finally focus on innovation, compliance and expanding access to digital finance across the region.”
