The International Monetary Fund wants Kenya to allow foreign-denominated stablecoin issuers to keep their reserves abroad, departing from rules that require part of the backing to be held locally. The IMF also recommends reviewing crypto capital thresholds.
The IMF’s proposal targets one of the most contested parts of Kenya’s new crypto framework. Under the current approach, stablecoin issuers must hold part of their backing assets in Kenya. The fund wants that requirement eased for issuers whose stablecoins are denominated in foreign currency, which would let them keep reserves in the markets where they operate.
The rules that the IMF is commenting on were recently finalised. The National Treasury’s draft Virtual Asset Service Providers Regulations, published in March 2026, proposed minimum capital of KSh500 million for stablecoin issuers.
Legal Notice No. 134 of 2026, gazetted on July 22, cut that threshold to KSh300 million. The Central Bank of Kenya supervises stablecoin issuers and payment-related crypto firms, while the Capital Markets Authority licenses exchanges and brokers.
The reserve requirement was the more controversial element in the draft. Reports on the draft proposed that a share of stablecoin reserves, around 30 percent, be held in local banks. I could not confirm how that provision appears in the final regulations, so readers should check the gazetted text before relying on the figure.
Industry reaction has been mixed. The Virtual Asset Association of Kenya, which represents more than 50 crypto firms, has supported the reforms while calling for adjustments to capital and compliance thresholds.
Some startups have said they are looking at Mauritius and South Africa because of the capital requirements, and the chair of a regulatory body has warned that disconnected rules could undermine Kenya’s ambition to become a regional fintech hub.
The IMF’s position reflects its broader push for alignment with global standards. The fund provided technical assistance to the Capital Markets Authority in 2024 and 2025, and has urged Kenya to align its regime with international practice to reduce financial crime risk and restore confidence among correspondent banks.
The trade-off is between oversight and access. Requiring reserves to be held locally makes it easier for regulators to verify backing and respond to failures. It can also raise costs and push issuers to choose more permissive jurisdictions, which weakens the oversight the rule was meant to provide.
Market size is a further consideration. Chainalysis estimates that about 733,300 Kenyans own digital assets, but the stablecoin market itself remains small, with reports putting circulating Kenyan-linked stablecoin supply at only about KSh18.8 million. The rules are therefore shaping a market that is still developing, rather than one already at scale.
The next signals will be the Treasury’s and the Central Bank’s response to the IMF’s recommendations, the final text of the reserve rules, and the licensing decisions that follow. The IMF’s next Kenya visit, which reports suggest is planned for December, may also feature the issue.
