MV Capital - Kenya's Regulator Turns to Blockchain Tool to Tackle Crypto Crime

Kenya's Capital Markets Authority seeks advanced analytics to monitor billions in digital asset flows under the country's new virtual asset law, aiming to address risks in one of Africa's top crypto markets

New Platform for Transaction Oversight

The Capital Markets Authority in Kenya has started the process to obtain a sophisticated blockchain analytics system. This move supports efforts to supervise the nation's expanding virtual asset sector following recent legislation.

Tender documents indicate the platform will track activity across Bitcoin, Ethereum, and more than 20 additional networks. It will operate in real time and allow review of past records to investigate potential issues and maintain standards.

Key capabilities include:Automated detection of high-risk wallets and substantial transfers
Identification of coin mixing services and addresses tied to restricted networks
Screening against United Nations and U.S. Office of Foreign Assets Control sanctions lists
Mapping of wallet connections and reconstruction of transaction sequences

The system will assign risk levels connected to concerns such as money laundering, ransomware, fraud, and financing of terrorism. It will also note popular exchanges among local users and spot unauthorized foreign services reaching the Kenyan market.

Background on Regulatory Changes

This initiative connects directly to the Virtual Assets Service Providers Act, signed by President William Ruto in October 2025 and effective from November of that year. The measure establishes the first full legal structure for virtual assets in Kenya.

Responsibility divides between authorities. The Central Bank of Kenya handles payments, stablecoins, and custodial services. The Capital Markets Authority manages exchanges, brokerages, investment advisors, and tokenization activities. This setup follows guidelines from the Financial Action Task Force on anti-money laundering practices.

Timeline DetailsNo licenses issued to date under the new framework
Existing operators must meet requirements by November 2026
Draft rules released by the National Treasury in March 2026

Scale of Kenya's Crypto Activity

Data from Chainalysis shows Kenyan users received approximately $19 billion in crypto assets from July 2024 to June 2025. This positions Kenya as the fourth largest such market in Africa. Estimates place the number of users above six million, with many transactions occurring through peer-to-peer and informal methods.

The volume underscores the need for capable monitoring as formal rules take shape. Much activity has occurred outside traditional channels, creating demand for direct on-chain visibility.

“We are hoping that Kenya can now be the gateway into Africa,”finance committee chairman Kuria Kimani

Features and Global Parallels

The planned tool resembles solutions from firms like Chainalysis, TRM Labs, and Elliptic. These providers supply comparable systems to governments for compliance and investigation purposes worldwide.

In the United States, Immigration and Customs Enforcement has obtained forensics software from TRM Labs and Chainalysis. In the United Kingdom, the tax authority works with TRM Labs on tracing activities. Kenya joins this pattern of using specialized technology to support oversight.

The platform will help build a detailed view of flows before the full licensing deadline, allowing authorities to understand market patterns and address gaps.

Aspect	Details
Scope	Bitcoin, Ethereum, and over 20 other chains
Primary Goals	Detect illicit patterns, ensure compliance, identify unlicensed operators
Market Context	$19 billion received, over 6 million users

Implications for the Sector

The procurement represents a step toward operational enforcement in Kenya's virtual asset framework. By developing these capabilities early, authorities aim to create conditions for orderly growth while reducing exposure to criminal use of the technology.

As the compliance period advances, the combination of licensing requirements and monitoring tools will shape how the market functions moving forward. This development occurs amid broader international adoption of similar approaches to balance innovation with risk management.