Experts have raised concerns that the newly gazetted cryptocurrency regulations could pile pressure on the shilling and drive up the cost of cross-border transactions if not carefully implemented.

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The concerns come days after the government operationalised the Virtual Asset Service Providers (VASP) Regulations, 2026, bringing stablecoin issuers and other virtual asset firms under the supervision of the Central Bank of Kenya (CBK) through stricter licensing, capital and consumer protection requirements.

While the regulations aim to strengthen oversight and protect Kenya's monetary sovereignty, experts warn that restricting access to globally accepted dollar-backed stablecoins too aggressively could fragment the digital payments market, reduce liquidity and raise the cost of international transactions.

According to experts interviewed by Forbes Africa , policymakers face the difficult task of regulating stablecoins without isolating Kenyan businesses from the global networks that have made digital currencies attractive for cross-border trade and payments.

📌 What You Need to Know

Pankaj Bengani, a former executive at Jack Dorsey's Block and co-founder of global stablecoin and digital asset network Meld, welcomed Kenya's decision to regulate the sector but cautioned against disrupting the ecosystem that gives stablecoins their value .

"The value of stablecoins comes from network effects," Bengani said, noting that globally accepted stablecoins derive much of their usefulness from widespread international adoption and deep liquidity.

The increasing use of US dollar-backed stablecoins such as USDT and USDC could gradually reduce demand for local currencies, potentially weakening central banks' control over monetary policy as more transactions shift to foreign-denominated digital assets.

At the same time, they warn that restricting access to those global stablecoins before locally issued alternatives become widely accepted could leave businesses with fewer payment options and higher costs when sending or receiving money across borders.

"The unintended consequence could be a more fragmented market with higher costs for cross-border payments," Bengani warned.

Kenya's new regulations require stablecoin issuers to obtain approval from the CBK before commencing operations , maintain a minimum paid-up capital of Ksh300 million and fully back their digital currencies with reserve assets equal to or exceeding the value of all outstanding stablecoins.

📰 Source: Kenyans.co.ke