Kenyan MPs Question 30% Local Reserve Rule for Stablecoins

Kenyan lawmakers are questioning whether a 30% domestic reserve requirement would protect users or restrict participation by international issuers. According to local media reports, the dispute emerged during talks between the Committee on Delegated Legislation and virtual asset representatives reviewing Treasury regulations.

MPs Question Whether Local Reserves Add Protection

According to a post published on the official Kenyan Parliament Facebook page, Regulation 74 would require issuers to hold at least 30% of stablecoin funds in segregated accounts at commercial banks in Kenya.

The remaining reserves would have to be invested locally in secure, low-risk, high-quality liquid assets. Reserves backing fiat-referenced tokens must also be denominated in the currency to which each token is pegged.

During the committee discussion, Samuel Chepkonga, chair of the National Assembly’s Committee on Delegated Legislation, warned that rules disconnected from international standards could undermine the competitiveness of Kenya’s regulatory framework. He said,

“If we make laws that are in one hole here and have no relation with the global practice, then we will be a laughing stock to the entire world.”

Mathare MP Anthony Olouch also questioned whether holding part of the reserves locally would offer meaningful protection when foreign issuers maintain most of their assets outside Kenya. He asked,

“What’s the purpose of the reserve? Is it not to protect the person within the Kenyan jurisdiction against a foreigner?”

Meanwhile, Regulation 74 would operate alongside Regulation 72, which already requires every stablecoin to be fully backed by reserve assets equal to the value of all tokens in circulation.

Those assets must remain liquid, be separated from an issuer’s operating funds, and be protected from creditor claims if the company becomes insolvent.

Lawmakers consequently questioned whether the 30% localization rule would strengthen consumer protection or duplicate safeguards already included in the wider reserve framework.

Redemption Gaps and Capital Rules Draw Parliamentary Scrutiny

Lawmakers also raised concerns about provisions requiring stablecoins to be redeemable “at any time,” saying the wording lacked a clear settlement deadline. Kathiani MP Robert Mbui warned that issuers could delay repayments while still claiming compliance, as the draft does not state when customers must receive their money.

The committee further identified differences between the draft’s redemption provisions. Regulation 68 requires issuers to redeem tokens on demand and at par value, while Regulation 77 also refers to payments based on the token’s market value.

MPs said the conflicting language could create uncertainty over whether customers would receive the pegged amount or a fluctuating market price. Committee vice chair Robert Githinji requested further explanations from Treasury officials and supported training based on jurisdictions with established digital asset rules.

Notably, the proposed regulations would operationalize the Virtual Asset Service Providers Act, which took effect on November 4, 2025. Under the framework, the Central Bank of Kenya would license and supervise stablecoin issuers, while the Capital Markets Authority would oversee exchanges, tokenization services, and other investment-related activities.

Stablecoin issuers would also be required to maintain KSh500 million in paid-up capital and at least KSh100 million in liquid capital. The draft additionally provides for monthly reserve examinations and annual independent reviews.

Related: How Kenya Is Emerging as One of Africa’s Leading Digital Asset Markets