Kenya converts crypto tax policy to platform fees under new law

• Kenya’s Finance Act 2025 replaces the digital asset tax with an excise tax on crypto platform service fees.
• The VASP Act requires registration, KYC compliance and representation on Kenyan boards of directors for all crypto companies.
• As Kenya strengthens regulation of the cryptocurrency sector, coordination between the CBK and CMA will guide implementation.

Kenya has introduced major changes to its crypto tax system, replacing digital asset tax with an excise tax on platform fees. The reform is part of the Finance Act 2025 and aims to align the country’s approach to digital asset taxation with international standards. The adjustment follows the implementation of the Virtual Asset Service Providers (VASP) Act, which formalizes how crypto businesses will operate under the supervision of the Central Bank of Kenya.

New tax model for service fees

Under the new framework, licensed crypto exchanges and brokers will pay excise tax on fees and commissions charged to users, local reports have confirmed. The previous system, which imposed a 3% tax on the total transaction value, has been abolished. Officials say the change better reflects how digital asset platforms make money.

The Kenya Revenue Authority (KRA) worked with industry representatives to refine the model to ensure a system based on service charges rather than asset values. Industry participants have expressed support for the revised policy. GoChapaa Chief Marketing Officer Philip Chege said the move addresses long-standing concerns about the fairness and practicality of crypto taxation.

He confirmed that the digital asset company consulted with the KRA and legal experts during the drafting process. Mr Chege said the dialogue between regulators and stakeholders had created a collaborative environment to form the new structure.

Enforcement of regulatory standards under the VASP Act

The VASP law, which came into force this year, requires all virtual asset platforms to register with the Central Bank of Kenya. Registered companies must maintain a physical office, implement know-your-customer (KYC) procedures and include Kenyans on their board of directors. The law also implements anti-money laundering and counter-terrorist financing standards in line with Financial Action Task Force guidelines.

These measures establish Kenya’s accountability framework in the digital asset space. The implementation of tax and registration measures will depend on coordination between the Central Bank of Kenya and the Capital Markets Authority. Both agencies will be responsible for service provider licensing, compliance and reporting processes. Analysts believe this structured approach will not only make oversight more formal, but also ensure that the appropriate amount of tax is collected from the rapidly evolving crypto market.
According to Chainalies data, Kenya is the third largest country in Africa in terms of overall cryptocurrency usage and number one in terms of peer-to-peer transaction volume. Now that the taxation and licensing framework is clearly defined, the government plans to increase compliance and transparency without slowing the growth of the digital financial sector.