Kenya’s fintech story has long been told as a narrative of speed and scale: mobile money that moved hundreds of millions of users from cash to digital wallets, startups that iterate faster than regulation can follow, and an investor community hungry for regional winners. That era; where product-market fit and distribution alone separated winners from the rest, is ending.

The Virtual Asset Service Providers Act (VASP Act) that was put in place in 2025 fundamentally rewrites the rules of market entry, trust and value capture for any firm working with digital assets. Compliance is now a legal checkbox, and a strategic asset that determines who gains access to customers, partners, capital and cross-border opportunities.

From our vantage point at YoguPay, working closely with Kenyan fintechs, it’s clear that compliance under the VASP Act is becoming more than a requirement—it’s a competitive edge. The law is redefining what strong operations and market trust look like, and early adopters will set the pace for the industry. This article outlines what that shift means in practice, and how founders and product leaders can align with regulation in a way that drives growth and differentiation.

The New Legal Baseline

Kenya’s VASP Act establishes the country’s first comprehensive licensing and supervisory framework for firms that create, custody, trade, broker, execute, or otherwise interact with virtual assets. The law brings digital-asset activity into the mainstream regulatory perimeter by defining what constitutes a Virtual Asset Service Provider (VASP),  and assigning oversight responsibilities to the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) depending on the activity in question.

Under the Act, VASPs must meet fit-and-proper criteria, maintain robust AML/CFT controls, implement consumer-protection measures, and adhere to ongoing reporting, record-keeping, and audit obligations. The Act also establishes a clear enforcement mechanism, including administrative penalties, license suspension, and full license withdrawal, giving regulators real tools to deter misconduct. The Act took effect in November, 2025, and CBK and CMA have already signaled that licensing and supervision will begin once the implementing regulations are published.

This shift is more than a compliance formality, considering it reshapes the operating environment for fintechs, crypto businesses, stablecoin issuers, digital-wallet providers, and any company handling virtual assets.

Why do these changes matter?

These high-level changes matter for three reasons:

1. Non-Compliance Is Now a Real Legal Risk

The VASP Act converts what was previously an informal or reputational risk into a formal regulatory obligation. Firms now face enforceable penalties; including fines, sanctions, and license withdrawal, making compliance a core operational requirement rather than a discretionary best practice.

2. Market Access Will Depend on Licensing

Authorization becomes the new gateway to Kenya’s digital-asset ecosystem. Banks, stablecoin issuers, exchanges, and payment partners will only work with licensed VASPs or fintechs operating through licensed intermediaries. Without a license, or a licensed partner, access to essential services will narrow significantly.

3. Licensing Becomes the New Trust Signal

Customers, enterprises, and institutional partners will increasingly use regulatory status as a trust filter. Licensed players, or those offering compliant white-label services, will enjoy stronger credibility, easier onboarding, and preferential partnerships across the financial sector.

The new crypto laws reset the competitive landscape: early movers who achieve licensing, or align with licensed operators, will benefit from institutional trust, easier onboarding, and a clearer path to scaling.

As a cross-border settlement provider, YoguPay benefits directly from this shift, since our value rests on bank integrations, corridor reliability, and regulatory trust. Aligning with VASP compliance thus becomes a commercial multiplier; enabling faster onboarding with banks, PSPs, and regional partners.

Why Compliance is a Competitive Advantage

1. Trust unlocks customers and institutional demand

Digital assets still carry a trust deficit among mainstream users and corporations. A license sends a definite signal to banks, corporates, telcos and high-net-worth customers that governance, custody, AML/KYC and incident response meet an enforceable national standard. 

In practice this reduces sales friction, lowers conversion costs, and increases the average contract value with cautious institutional buyers who will only transact with authorized providers. Regulators themselves are also now active market participants: some market access such as issuing stablecoins, and custody of certain token types will simply be closed to unlicensed players.

2. Preferential partnerships with banks and PSPs

Banks and payment service providers must manage their own regulatory exposure for stablecoin transfers, and will be required to transact with licensed VASPs. For fintechs, a VASP license becomes a commercial lever to negotiate better banking terms, on/off-ramp access, and co-branded product integration with incumbent players. In short, compliance converts from a cost item into a business development asset.

Because YoguPay already provides fully compliant rails for remittance, treasury, and liquidity movement, we’re well-positioned as the preferred partner for banks seeking to support digital asset flows safely. Our pre-built governance, AML, and reporting frameworks significantly reduce due-diligence friction and make technical and operational integrations far easier.

3. Access to institutional capital and enterprise contracts

Institutional investors and enterprise customers conduct legal and compliance due diligence before signing large checks or long contracts. Licensed entities face shorter diligence cycles and a higher valuation multiple because the regulator has already validated certain operational controls; or at least the firm has committed to them. For fintechs seeking growth capital or B2B contracts, a clear compliance posture materially increases credibility.

4. Ability to scale regionally and participate in formal markets

A regulated Kenyan digital asset service provider will find it easier to forge cross-border agreements and reassure foreign partners who worry about legal clarity. Many international counterparties prefer counterparties operating in jurisdictions with clear rules and supervisory oversight. Licensing therefore becomes a passport to regional product distribution and cross-listing opportunities.

At YoguPay, we’ve seen how regulated rails give cross-border settlement companies a clear advantage, making it easier to forge partnerships with regional PSPs, diaspora channels, and liquidity providers.

5. Competitive edge through operational resilience

Compliance requirements force firms to build stronger operational foundations: improved custody practices, hardened incident response, clearer governance, thorough AML controls, transaction monitoring, and better record-keeping. These systems reduce regulatory risk, while also becoming differentiators, as customers prioritize safety over novelty once the product proves useful.

Practical Checklist for VASP Act Requirements

To treat compliance as strategy, fintech teams must translate legal requirements into a concrete implementation plan. Below are the most important areas to address immediately.

1. Licensing roadmap

Identify whether your activities fall under the CBK or CMA remit and the specific licence class required. Begin preparing licence applications, governance documents, and KYC/AML manuals. Regulators have published guidance and public notices indicating when the regime is operational; firms should be ready to apply as regulations are finalised.

Fintechs that are not yet ready to pursue a license can operate through regulated infrastructure layers offered by WaaS enablement services like YoguPay, reducing upfront compliance burden while still meeting partner expectations.

2. Governance and board oversight

Establish a fit-and-proper board and compliance function. Regulators expect demonstrable governance structures, documented roles, and a clearly empowered compliance officer.

3. AML/CFT programs

Build transaction monitoring, customer due diligence (CDD), enhanced due diligence (EDD) for higher-risk customers, suspicious activity reporting (SAR) workflows, and record retention policies aligned to the crypto Act and existing Proceeds of Crime/AML frameworks.

YoguPay’s API infrastructure already incorporates transaction monitoring, sanctions filtering, and address-screening APIs that align with common VASP requirements, helping clients accelerate their compliance buildout.

4. Custody and security

Define custody arrangements, key management practices, multi-sig controls, and an audited security posture. Insurers and institutional partners will ask for independent audits and penetration test reports.

5. Consumer protection and disclosures

Implement clear user disclosures, dispute resolution mechanisms, and customer funds segregation where applicable.

6. Data protection and privacy

Align VASP data flows with the Data Protection Act and ensure safe cross-border data transfer practices.

7. Incident response and continuity planning

Create an incident response plan, communication playbook, and continuity mechanisms. Regulators increasingly expect timely incident reporting and remediation.

8. Regulatory reporting and audit trails

Build the capability to extract accurate, auditable reports on transactions, customer onboarding, and AML checks. Regulators will require periodic reporting and may conduct on-site inspections.

Translating these requirements into product timelines and budgets is not optional; it’s the difference between being able to operate legally and being prevented from doing so.

Go-to-market implications for Product, Pricing, and Partnerships

Compliance affects product design and GTM in three ways:

• • Pricing strategy: higher compliance costs should be reframed as investments in trust. Firms can justify premium pricing, or enterprise pricing tiers for regulated products. Conversely, commoditized, unregulated offers will face margin pressure as sophisticated users move to licensed providers.
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  • Product roadmaps: Product roadmaps: Design features that highlight compliance, such as immutable audit trails, built-in KYC flows, and whitelisting for withdrawals as product differentiators. For custodial products, offer insurance-backed custody or third-party custodians that meet regulator expectations. The U.S. GENIUS Act exemplifies this approach, mandating proper reserves and safeguards.

Our YoguPay Wallet-as-a-Service stands out because we already offer cross-border settlement infrastructure with built-in audit trails, KYC natives, custody patterns, and compliance attestations that are equipped for regulated development.

• • Partnership models: consider white-label or agency models with licensed incumbents for quicker market access while building capacity to be licensed in-house. These partnerships should be contractually defined to allocate regulatory risk clearly.

Culture and Talent: Hire for Compliance Fluency

A strategic compliance position starts with talent. As the VASP Act raises regulatory expectations, fintechs need teams that understand both the law and the product mechanics behind digital-asset services. This means hiring professionals who can translate regulatory requirements into practical, scalable workflows.

Key roles include:

• • Compliance officers with fintech or payments experience who can operationalize regulatory obligations.
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  • AML/CFT analysts capable of designing risk-based rules, monitoring triggers, and investigation playbooks.
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  • Legal counsel versed in digital assets, licensing frameworks, and cross-border regulatory alignment.
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  • Security and infrastructure engineers skilled in key management, cryptographic custody, and secure wallet architectures.

Equally important is cultural integration. Compliance should be embedded directly into product, engineering, and operations; not isolated in a standalone department. When compliance specialists sit inside product squads, risk reviews happen earlier, iteration is faster, and costly regulatory mistakes are avoided. This creates an organization where compliance becomes a competitive capability, not a bottleneck.

YoguPay’s strength is rooted in helping companies accelerate their regulatory journey by providing WaaS infrastructure where compliance, engineering, and regulatory expertise are already built in.

Cost, Timelines and ROI

Compliance is neither free nor immediate. Licensing under the VASP Act requires upfront investment; from application fees and policy drafting to system upgrades, audits, and specialized staff. Implementation also takes time, particularly for firms building AML workflows, custody controls, or governance structures from scratch.

But the return on that investment is both measurable and strategic. A compliant posture delivers:

• • Shorter sales cycles with enterprise and institutional customers who now demand licensed counterparties.
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  • Lower regulatory exposure, reducing the risk of account freezes, enforcement actions, or forced market exit.
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  • Higher valuation multiples, as investors increasingly reward companies with regulatory clarity and defensible compliance foundations.
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  • Stronger banking and partnership access, unlocking fiat on/off ramps, liquidity providers, and cross-border corridors.
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  • Greater pricing power, especially for regulated stablecoin, custody, OTC, and cross-border payment products.

In short, compliance is not a regulatory tax. It is an asset that drives revenue, unlocks partnerships, accelerates fundraising, and strengthens long-term competitiveness. This is why, at YoguPay, our compliance-first architecture helps cross-border settlement companies build stronger investor confidence.

How to Make Compliance a Visible Competitive Story

Marketing compliance as a selling point is an art. Practical tactics:

• • Publish an “operational security and compliance whitepaper” summarising controls, audits and insurance.
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  • Use licence status, audit results, and third-party attestations in sales materials.
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  • Offer compliance APIs or compliance-as-a-service features that other fintechs can integrate (if your model supports it).
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  • Share case studies showing prevented fraud or successful institutional onboarding thanks to your controls.

API-infrastructure providers are therefore required to publish compliance attestation packs, SOC reports, and AML artefact documentation that partners can incorporate into their own sales or regulatory submissions.

What Regulators are Likely to Prioritize and Why this Helps VASPs

Kenyan regulators have already signaled their supervisory priorities: AML/CFT enforcement, market integrity, consumer protection, and systemic risk mitigation. These areas align with global regulatory trends and reflect the risks most associated with digital-asset markets.

As oversight tightens, illicit operators, thinly-capitalised platforms, and poorly governed players will be forced out, shrinking grey-market competition. Meanwhile, licensed firms that have invested in controls, audits, and governance benefit from:

• • Greater market share as non-compliant actors exit.
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  • Increased regulatory goodwill, making it easier to unlock partnerships or pilot new products.
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  • A credibility boost with enterprises, banks, and global partners who prefer vetted, licensed entities.
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  • Policy nudges and public messaging that encourage adoption of regulated solutions over informal intermediaries.

Regulation, in this context, becomes a market-shaping force that rewards firms with strong compliance foundations. As the sector consolidates, WaaS providers, who maintain audit-ready operations; become the default rails powering compliant crypto and cross-border products.

Practical First 90-Day Checklist for Founders and Product Leaders

While the VASP Act, 2025 provides a 12-month grace period before full enforcement, the first 90 days are crucial for establishing a solid compliance foundation. Early action ensures your firm is prepared for licensing, builds credibility with partners, and avoids costly delays.

1. Map Product Activities to the VASP Act

Identify which aspects of your product fall under the Act, and determine whether the Central Bank of Kenya (CBK) or Capital Markets Authority (CMA) will be the primary regulator. These products include custody, trading, brokering, payment facilitation, or wallet management.

2. Run a VASP Gap Analysis

Evaluate your current operations against a VASP licence checklist, covering governance structures, AML/CFT frameworks, custody protocols, reporting capabilities, and audit trails. Identify gaps that need immediate attention.

3. Hire or Engage Compliance and Legal Experts

Bring on a compliance lead and legal advisor with direct experience in VASP licensing and digital-asset regulation. Their expertise will guide internal processes, prepare documentation, and mitigate risk.

4. Prepare Licensing Dossiers and Fit-and-Proper Documentation

Collect and organize board approvals, policies, risk assessments, key personnel information, and other materials required for the licence application. Early preparation accelerates submission and reduces back-and-forth with regulators.

5. Build or Procure AML and Custody Infrastructure

Start developing or integrating transaction monitoring, reporting systems, and secure custody solutions now. Waiting until licensing is imminent can delay approval and jeopardize operational readiness.

6. Engage Banks, Telcos, and Strategic Partners

Proactively communicate your compliance roadmap with potential banking and telecom partners, demonstrating your licensing strategy, risk controls, and readiness. Early transparency builds trust and smooths integration.

With YoguPay, companies can shorten their compliance and settlement timelines by providing WaaS enablement with core compliance modules, settlement rails, and secure custody integrations, all aligned with expected VASP standards.

Conclusion: Treat Compliance as Strategy, Not as Tax

Kenya’s VASP Act reframes the digital asset playing field. For fintechs that move early and thoughtfully, compliance is both a defensive necessity and a commercial advantage: it unlocks customers, partnerships, funding, and regional scale. Treating the regulator as a stakeholder rather than an adversary repositions compliance from a cost center to a growth lever.

Founders who embed compliance into product design, hire the right talent, and tell a credible trust story will find that the license on the wall becomes a competitive advantage; and in the new Kenyan fintech order, edge determine winners.

Our YoguPay advantage shows how a compliance-first approach turns cross-border settlement infrastructure into a scalable, trust-backed growth engine. Visit our website to explore how YoguPay’s API infrastructure and WaaS stack can help your fintech build secure, compliant, and scalable digital-asset solutions.