( 3 Minutes Read)
Kenya has enacted far-reaching reforms to its cryptocurrency taxation system through the Finance Act 2025, signaling a significant step toward harmonizing the country’s digital finance environment with international standards.
Under the new law, the 3% Digital Asset Tax (DAT) — previously charged on the total value of cryptocurrency transactions — has been repealed. In its place, the government has introduced an excise duty applied specifically to platform fees and commissions collected by licensed digital asset operators, such as exchanges and brokers.
This shift changes the taxation basis from the overall transaction value to the service fees charged by platforms, creating a more equitable and practical model. For individuals and businesses, income tax or capital gains tax will still apply, depending on how digital assets are held, traded, or used.
According to Philip Chege, Chief Marketing Officer at GoChapaa, a Kenyan digital finance startup, the reform represents a fairer and more accurate reflection of how the digital asset industry functions.“The repeal of the Digital Asset Tax and introduction of excise duty on service fees is a more practical and fair approach—it recognises how our business models actually work,” Chege stated.
Chege also revealed that the Kenya Revenue Authority (KRA) collaborated closely with representatives from the blockchain sector during the policy’s formulation, emphasizing the importance of open dialogue between regulators and industry stakeholders. “It was encouraging to see open dialogue between regulators and industry stakeholders. That kind of collaboration is what will move this space forward,” he added.
Complementing the tax reform is the newly enacted Virtual Asset Service Providers (VASP) Act, which mandates all crypto firms to register with the Central Bank of Kenya (CBK), establish local offices, implement Know Your Customer (KYC) procedures, and include Kenyan representation on their boards. The Act also enforces strict anti–money laundering (AML) and counter–terrorism financing (CTF) measures, consistent with Financial Action Task Force (FATF) standards.
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Analysts note that these regulatory and fiscal measures reflect Kenya’s broader ambition to formalize oversight of digital assets while ensuring transparent and fair revenue collection.According to data from Chainalysis, Kenya ranks third in Africa for overall cryptocurrency adoption and first in peer-to-peer transaction volumes — highlighting its growing influence as a regional crypto hub.
Chege concluded that the reforms offer Kenya a pivotal opportunity to lead the continent in building a fair and transparent digital asset ecosystem.“With taxation and regulation now taking shape, we can finally focus on innovation, compliance, and expanding access to digital finance across the region,” he said.