The International Monetary Fund (IMF) has urged Kenya to reconsider parts of its new cryptocurrency regulatory framework proposing that foreign-denominated stablecoin issuers be allowed to hold reserves abroad rather than being required to maintain part of their backing assets locally.
The proposal could benefit global issuers of dollar-backed stablecoins such as Tether’s USDT and Circle’s USDC which currently face requirements to maintain a portion of their reserves in Kenya.
The IMF argues that forcing foreign issuers to hold reserves in Kenyan banks could discourage them from establishing local subsidiaries leaving customers to access their stablecoins through offshore platforms outside direct domestic regulatory oversight.
It recommends allowing reserves to remain in issuers’ home jurisdictions or with foreign custodians subject to strict conditions on fund transfers and regulatory supervision. Kenya could, in exchange, restrict the use of foreign-denominated stablecoins by regulated domestic financial institutions.
REGULATIONS | The Kenya VASP Regulations, 2026, Prohibit Unlicensed Stablecoin Offerings
The Fund is also calling for a review of minimum capital requirements for crypto businesses arguing that the rules should reflect the size, complexity, and risks of individual operators rather than impose static thresholds.
Under Kenya’s regulations, crypto exchanges face a minimum paid-up capital requirement of KES 100 million ($770,000) which the IMF warns could discourage smaller firms from entering the market.
The recommendations come as Kenya formalises oversight of its growing cryptocurrency industry. Kenyans transferred a record KES 740 billion ($5.7 billion) in cryptocurrency in the year to June 2026, a 38% increase from KES 505 billion ($3.89 billion), according to Chainalysis.
Kenya has overtaken Ethiopia to become Africa’s 3rd-largest cryptocurrency market after South Africa and Nigeria.
REPORT | Sub-Saharan Africa Crypto Economy Grew Over 13% YoY Led by South Africa, Says 2026 Chainalysis Report
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