Africa went from soft bans to statutes in three years
In roughly three years, Africa moved from a patchwork of central-bank cautions to a set of purpose-built virtual-asset statutes. Between late 2024 and mid-2026 alone, four countries the size of continents in economic terms - Kenya, Mauritius, South Africa and Nigeria - either passed comprehensive crypto laws or brought virtual assets into an existing financial-services perimeter.
For any bank, licensed EMI, custodian or CASP looking at the continent, that means one thing: 'wait until the rules exist' is no longer the correct posture. The rules exist. They differ in structure, capital thresholds and who supervises what, and understanding those differences is the whole game.
This memo maps the four regimes that matter, measured against MiCA and the EU E-Money Directive (EMD2) as the reference framework. It is deliberately comparative - the questions a bank must answer ("which licence?", "what capital?", "can a bank hold it or must we spin up a subsidiary?", "what happens to foreign stablecoins?") have different answers in Nairobi, Port Louis, Johannesburg and Lagos, and the differences are decisive.
MiCA and EMD as the yardstick
The EU regime is the natural comparator because it is the only mature, in-force framework covering the full stack - service providers, stablecoins, e-money and the deposit-token carve-out. For a full breakdown see our MiCA CASP guide and state-of-the-market snapshot. In one page:
- ✓ CASP authorisation. A single crypto-asset service provider licence, granted by one national competent authority and passportable across the EU, covering ten services (custody, trading platform, exchange, execution, RTO, advice, portfolio management, transfer, etc.). Banks may provide these services by notification rather than full authorisation - MiCA Article 60.
- ✓ EMT (e-money token). Single-fiat, redeemable at par, fully backed, no interest. May be issued only by a credit institution or an authorised EMI.
- ✓ ART (asset-referenced token). Basket / commodity / crypto reference; heavier own-funds and reserve requirements; market-value redemption (the key ART/EMT difference).
- ✓ EMD2. The pre-existing e-money regime: EUR 350k initial capital, safeguarding, redemption at par, no interest. MiCA's EMT rules were deliberately built on this foundation.
- ✓ Deposit tokens. Excluded from MiCA (Article 2). A tokenised deposit that remains a deposit stays inside banking law (CRD/CRR + deposit-guarantee rules). This carve-out matters more than anything else for a bank - see our RWA tokenization architecture deep-dive.
Two ideas that follow from this: (1) the regulatory label follows the legal nature of the underlying claim, not the technology - putting a bond on a ledger does not make it a stablecoin; (2) for a bank, a tokenised deposit is almost always the right route rather than issuing an EMT or ART - it keeps the product inside the banking perimeter you already operate under.
Kenya - the dual-regulator MiCA analogue
Kenya is the most consequential recent move on the continent. The Virtual Asset Service Providers Act, 2025 (Act No. 20) commenced on 4 November 2025, and its implementing VASP Regulations, 2026 (Legal Notice No. 134) were gazetted on 24 July 2026. In under a year, Kenya went from the 2015 "soft ban" on banks touching crypto to a fully articulated, FATF-recognised framework.
Structurally, the regime is best understood as a MiCA-style activity-licensing regime bolted onto a dual regulator. Where MiCA vests a single CASP authorisation in one national competent authority, Kenya splits ten licensable activities between the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) by function:
| Licensable activity | Regulator | MiCA / EMD analogue |
|---|---|---|
| Custodial wallet / custody services | CBK | CASP: custody & administration |
| Transfer and conversion services | CMA | CASP: transfer / exchange |
| Trading, clearing and settlement platforms | CMA | CASP: operation of trading platform |
| Payment gateway | CBK | PSD2 / e-money rails |
| Brokerage services | CMA | CASP: execution / RTO |
| Investment advisory services | CMA | CASP: advice |
| Virtual-asset management | CMA | CASP: portfolio management |
| Initial Coin Offering (ICO) | CMA | MiCA offer / white paper |
| Virtual-asset tokenisation | CMA | MiCA offer / ART (partial) |
| Stablecoin issuance | CBK | MiCA EMT / EMD e-money |
The practical consequence: a single business that both operates an exchange (CMA) and offers custody plus fiat on/off-ramps (CBK) needs parallel licences from both regulators. This is the sharpest divergence from MiCA's one-authority, one-passport model, and it materially affects how a bank should map its intended product set.
Kenya - capital thresholds, stablecoin rules, the bank question
The 2026 Regulations set minimum paid-up capital by category. Kenya cut most thresholds sharply between the March 2026 draft and the July 2026 gazettal after industry pushback - a signal worth reading. Reported final figures (verify against LN 134):
On stablecoins Kenya did not adopt MiCA's EMT/ART split. Instead it created a single stablecoin issuer licence, placed it with CBK, and - through CBK's stated "same function, same regulation" approach - is treating fiat-pegged stablecoins with the same economic logic as its existing e-money regime. The substantive rules map almost one-to-one onto MiCA's EMT requirements: full 1:1 reserve backing, at-par redemption within two working days, no interest to holders, bankruptcy-remote reserves, and a specific 30% minimum in segregated trust accounts at Kenyan banks. Two divergences matter: Kenya opens issuance to any licensed stablecoin issuer meeting the capital test (not restricted to banks/EMIs), and it imposes a foreign-stablecoin listing gate - an exchange may not list a stablecoin unless it is CBK-approved and issued by a licensed issuer, creating real delisting risk for USDT and USDC on Kenyan venues.
| Category | Draft (Mar 2026) | Final (Jul 2026) | Regulator |
|---|---|---|---|
| Stablecoin issuer | KES 500m | KES 300m | CBK |
| Wallet / custody provider | KES 150m | KES 150m | CBK |
| Exchange | KES 150m | KES 100m | CMA |
| Token-issuance platform | KES 200m | KES 20m | CMA |
| ICO | KES 200m | KES 20m | CMA |
| Virtual-asset manager | KES 30m | KES 20m | CMA |
| Tokenisation provider | KES 200m | KES 10m | CMA |
| Payment processor / gateway | KES 50m | KES 10m | CBK |
| Broker | KES 30m | KES 10m | CMA |
| Investment adviser | KES 2.5m | Nil (exempt) | CMA |
The pivotal structuring question for a bank: can it hold the VASP licence directly, or must it use a ring-fenced subsidiary? The Act does not prohibit a bank from holding a VASP licence (s.8(1)), and s.11(k) requires a regulated applicant to obtain a "no-objection" from its existing regulator - the Kenyan counterpart to MiCA Article 60. The primary text does not settle the direct-vs-subsidiary question, but the reasoned expectation - to be confirmed with CBK - is that a subsidiary is the practical route, for three reasons: the Banking Act typically forces ancillary financial businesses into CBK-approved subsidiaries; VASP client-asset segregation is cleanest in a dedicated entity; and Basel-style consolidated supervision of crypto exposures points to ring-fencing. Full playbook: Kenya VASP Act - bank playbook.
Mauritius - the single-regulator African benchmark
Mauritius is the most useful African precedent because it did what Kenya has now done, four years earlier, and because it is a FATF-compliant, off-grey-list jurisdiction (grey-listed February 2020, removed 21 October 2021). The Virtual Asset and Initial Token Offering Services Act 2021 (VAITOS) came into force on 7 February 2022, with the Financial Services Commission (FSC) as sole regulator - a cleaner, single-authority design than Kenya's dual model, and closer to MiCA's one-competent-authority structure.
The most interesting design choice: the definition of "virtual asset" in VAITOS expressly excludes digital representations of fiat currencies. On a plain reading, a fiat-backed stablecoin therefore falls outside VAITOS entirely and would be analysed under the Bank of Mauritius' payments/e-money regime (National Payment Systems Act 2018). This is the opposite design choice to Kenya, which pulled stablecoins expressly into its VASP statute under CBK. Mauritius is separately piloting a retail CBDC "Digital Rupee", and - relevant for any cross-border structuring - is not just an alternative jurisdiction but a plausible parent-company or fund-vehicle jurisdiction for African crypto operations, given its financial-services centre status.
| Licence class | What it authorises | Min. capital | MiCA analogue |
|---|---|---|---|
| M | Broker-dealer: VA↔fiat and VA↔VA exchange | MUR 2m (~USD 44k) | CASP: exchange / RTO |
| O | Wallet services; transfer of VAs; key admin | 12 months working capital | CASP: custody / transfer |
| R | Custodian: safekeeping / administration | MUR 5m (~USD 110k) | CASP: custody |
| I | Advisory services on VAs / ITO-related | Working capital to meet debts | CASP: advice |
| S | Marketplace: VA exchange for third parties | MUR 6.5m (~USD 143k) | CASP: trading platform |
| ITO | Issuer of an initial token offering | Working capital to meet debts | MiCA offer / white paper |
South Africa - the most mature African regime
South Africa was the first African jurisdiction to move from cautions to a functioning licensing regime, and remains the most mature. In FSCA General Notice 1350 (19 October 2022) it declared crypto assets a "financial product" under the Financial Advisory and Intermediary Services Act (FAIS), bringing every crypto intermediary into a conduct-licensing net as a Crypto Asset Service Provider (CASP).
As of January 2026 the FSCA reported 512 applications, roughly 300 approved - by far the largest licensed CASP population on the continent. On stablecoins, SARB and the FSCA issued a joint communication (June 2026) signalling they are unlikely to approve foreign-currency-pegged stablecoins (USDT/USDC) for domestic payments - a dollarization concern - while assessing rand-referenced stablecoins separately. SARB's draft e-money framework (November 2025) may pull fiat-referenced stablecoins into the "e-money" perimeter.
The upshot: South Africa runs a dual conduct (FSCA/CASP) + payments/prudential (SARB) architecture, with a restrictive line on foreign stablecoins that Kenya's listing-gate echoes.
Nigeria - the largest African market
Nigeria's Investments and Securities Act 2025 gives statutory recognition of virtual assets as securities under SEC Nigeria. Its interim onboarding window is the Accelerated Regulatory Incubation Programme (ARIP), issued 21 June 2024, for VASPs and digital investment service providers pending full registration. Note the actual name is "Incubation," not "Incentive," as frequently misreported.
The Central Bank of Nigeria reversed its February 2021 banking ban in December 2023, issuing guidelines that let banks service SEC-registered VASPs - the same ban-to-regulated-access arc as Kenya, two years earlier.
Nigeria also runs the continent's most-quoted private stablecoin, cNGN (1:1 to the naira, issued by a licensed consortium in a CBN sandbox), which is distinct from the eNaira CBDC. The Africa Stablecoin Consortium behind cNGN brands itself pan-African with ambitions across Nigeria, Ghana, Kenya and Uganda - though cNGN itself is naira-denominated and Nigeria-regulated, so the "pan-African" claim is aspirational reach rather than a live multi-currency network today.
Comparative matrix across the four regimes
The consolidated view across the dimensions that actually decide strategy:
| Dimension | EU (MiCA / EMD) | Kenya (VASP Act 2025) | Mauritius (VAITOS 2021) | SA / Nigeria |
|---|---|---|---|---|
| Service-provider licence | Single CASP, passportable | Split CBK / CMA (10 activities) | 5 FSC classes (M/O/R/I/S) | SA: FSCA CASP · NG: SEC (ISA 2025) |
| Regulator model | One NCA per state | Dual (CBK + CMA) | Single (FSC) | SA: FSCA + SARB · NG: SEC + CBN |
| Stablecoins | EMT / ART regime; bank or EMI | CBK stablecoin licence, 1:1, at par, no interest | Fiat stablecoins excluded from VAITOS; e-money regime instead | SA: likely e-money · NG: cNGN in sandbox |
| E-money base | EMD2: EUR 350k, safeguarding | E-Money Regs 2013: KES 60m, trust-account float | NPSA 2018 (Bank of Mauritius) | Established e-money regimes |
| Deposit tokens | Outside MiCA; banking law (CRD) | No bespoke rule; Banking Act / CBK by analogy | No bespoke rule; banking law | No bespoke rule |
| Tokenised debt / securities | MiFID II + Prospectus + DLT Pilot | CMA securities + tokenisation licence; NSE KDX | Securities Act (FSC) | SA/NG securities regulators |
| Bank as licensee | Art. 60 notification for credit institutions | Permitted; s.11(k) no-objection; likely subsidiary | Not barred; BoM comfort needed | Via subsidiary / group |
| FATF status | Compliant | Grey-listed Feb 2026; VASP Act credited as progress | Off list since Oct 2021 | SA off list · NG grey-listed |
| Foreign stablecoins | Permitted if compliant | Listing gate: CBK approval required | Outside VAITOS perimeter | SA: likely refused for domestic payments |
PAPSS - the pan-African payment rail everyone forgets
There is, as yet, no continental harmonised crypto rulebook. But there is a continent-wide payment infrastructure that materially changes the strategic map. The Pan-African Payment and Settlement System (PAPSS), operated by Afreximbank with the African Union and the AfCFTA Secretariat, lets African institutions clear and settle cross-border payments in local currencies rather than routing through offshore USD/EUR correspondents.
Adoption has accelerated sharply: from roughly 19 countries and 150+ banks in late 2025 to about 28 countries, 190+ banks and 16 payment switches by mid-2026, with the Bank of Central African States (BEAC) joining in July 2026 to bring all six CEMAC states in. The Central Bank of Kenya is publicly supportive, positioning Nairobi as an East African hub.
Two nuances matter for a bank. First, PAPSS is a conventional centralised settlement system, not a blockchain or tokenised network. Talk of a "pan-African digital currency" is explicitly exploratory and long-horizon, not committed policy. Second, PAPSS is increasingly framed as the regulated, central-bank-backed complement (and alternative) to stablecoins for intra-African settlement - which, combined with Kenya's stablecoin-reserve-in-local-banks rule, points to a genuine commercial opening for banks in reserve custody and settlement services rather than token issuance alone. This is a fundamentally different competitive dynamic than what we covered in cross-border payments: SWIFT vs blockchain - here the regulated rail is winning the intra-continental leg.
FATF, ESAAMLG and what grey-listing means today
Kenya's AML/CFT baseline is the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA), supervised by the Financial Reporting Centre. The VASP Act 2025 and 2026 Regulations impose CDD/KYC, transaction monitoring, 7-year record-keeping and regulatory reporting directly on licensees - the standard FATF Recommendation 15 apparatus. One open technical point: commentary suggests POCAMLA may still need a consequential amendment to formally list VASPs as FRC reporting institutions - verify before relying on VASP-to-FRC reporting flows.
On FATF status: Kenya was grey-listed in February 2024 and, as of the 13 February 2026 plenary, remains on the increased-monitoring list. The important nuance is that FATF's February 2026 statement expressly credits Kenya with "adopting a legal framework for the licensing and supervision of virtual asset service providers" - the VASP Act is counted as progress, not a gap. Remaining action-plan items are broader (risk-based supervision, STR filing, TFS, NPO oversight). Practically, grey-list status means enhanced correspondent-bank due-diligence expectations persist, but the crypto framework is a completed, FATF-recognised deliverable, and exit is being actively pursued.
Regionally, ESAAMLG's Fintech First Follow-Up Report (September 2025) found FATF Recommendation 15 compliance across the region to be weak - only Mauritius and Namibia rated largely compliant, and only four members (Botswana, Mauritius, Namibia, Seychelles) had Travel-Rule legislation. Kenya was assessed non-compliant on R.15 with its AML/CFT framework not yet applied to VASPs - precisely the gap the 2025 Act and 2026 Regulations are designed to close.
Strategic implications for a bank entering Africa
Five moves that follow from the analysis above, in order of decisiveness:
- ✓ Map the product set to the regulator split first. Kenya's dual CBK / CMA architecture is the defining feature of its regime. Before anything else, classify each intended product - custody, exchange, fiat ramps, stablecoin, advisory, tokenisation - and identify which require CBK, which require CMA, and which require both. A full-stack offering will need parallel licences.
- ✓ Assume a ring-fenced subsidiary, secure regulator no-objection early. Kenya's s.11(k) no-objection is the gating step for a regulated bank. A subsidiary is the likely-required structure across all four jurisdictions we cover. Confirm with the relevant regulator before filing - this is the highest-priority open question.
- ✓ Treat stablecoins and tokenised deposits as different animals. A KES-pegged stablecoin sits in the CBK VASP stablecoin licence (KES 300m capital + reserve/redemption rules). A tokenised deposit, kept on-balance-sheet, most plausibly stays in the Banking Act / CBK banking perimeter - lighter incremental licensing and the natural fit for a bank. Keep the deposit product on-balance-sheet to preserve banking treatment.
- ✓ Mind the foreign-stablecoin listing gates. If the strategy involves offering or custodying USDT/USDC, Kenya's CBK-approval listing requirement and South Africa's SARB position must be built into product design - or the bank issues/uses a locally-approved stablecoin instead.
- ✓ Use PAPSS as the regulated cross-border rail. With PAPSS now covering ~28 countries and expanding through CEMAC, cross-border intra-African settlement no longer requires a stablecoin corridor. For a bank with regional trade-finance ambitions, the opening is reserve custody, settlement services and PAPSS connectivity - not token issuance alone.
What the market has not yet decided
These are the points where primary texts are silent, sources conflict, or the fast-moving 2026 Regulations should be read line-by-line. Ranked by decision-weight for a bank entering the market:
- ✓ Bank direct vs subsidiary (Kenya). Whether a bank may hold the VASP licence directly or must use a ring-fenced subsidiary. The Act is silent; the reasoned expectation is subsidiary, but confirm with CBK/CMA before committing capital.
- ✓ Prudential / Basel capital treatment of crypto-asset exposures for a Kenyan bank - not yet codified.
- ✓ Stablecoin vs e-money boundary. A KES-pegged token could arguably sit in either the E-Money Regs 2013 or the VASP stablecoin licence. Because both are administered by CBK, the conflict is manageable, but the classification drives which rulebook applies.
- ✓ POCAMLA consequential amendment. Whether POCAMLA still needs a formal amendment to list VASPs as FRC reporting institutions.
- ✓ Mauritius stablecoin treatment. The FSC's FAQ excludes fiat stablecoins from VAITOS but the practical Bank of Mauritius treatment for a fiat-referenced token is not fully documented.
- ✓ Transitional filing deadlines for incumbents under LN 134 (the Act gives a one-year window from 4 November 2025).
If you are structuring a licensable footprint in East, West or Southern Africa - or evaluating whether to route the entity through Mauritius vs licensing locally - we regularly work through exactly these questions with banks and CASPs. Happy to trade notes on your specific perimeter.
Principal sources
Kenya - primary: Virtual Asset Service Providers Act 2025 (Kenya Law) · CBK VASP Act commencement notice · Draft VASP Regulations 2026 · CBK E-Money Regulations 2013 · IMF Technical Assistance Report: Kenya Crypto Regulation (2025)
Kenya - analysis: TechCabal: Kenya gazettes VASP Regulations 2026 · Business Daily: Treasury cuts crypto capital limits · TechCabal: offshore stablecoin delisting risk
Mauritius: VAITOS Act text · FSC VAITOS FAQ · FSC Capital and Other Financial Requirements Rules 2022
South Africa & Nigeria: DLA Piper: FSCA update on CASP licensing (Jan 2026) · SARB/FSCA Joint Communication on crypto assets (June 2026) · SEC Nigeria ARIP Framework
FATF & regional: FATF Jurisdictions under Increased Monitoring (Feb 2026) · ESAAMLG Fintech First Follow-Up Report (Sep 2025) · Afreximbank: BEAC joins PAPSS (Jul 2026) · African Business: PAPSS network expands (Nov 2025)