Kenya deploys blockchain analysis before issuing encryption licenses

Kenya will deploy a blockchain monitoring platform to implement new regulations on virtual asset supervision

Kenya has embarked on purchasing a blockchain monitoring platform that can track transactions on more than 20 blockchain networks. The move comes as Kenya prepares to regulate licensed crypto businesses under its newly promulgated virtual assets law.

Abstract

Kenya plans to deploy blockchain monitoring software in preparation for its supervision of licensed encryption businesses. The proposed platform will track transactions on more than 20 blockchains and flag suspicious wallets and transfers. The move follows Kenya\'s new virtual asset law and proposed reporting rules for crypto service providers.

Tender documents disclose technical details

According to tender documents from the Kenya Capital Markets Authority (CMA), the agency is seeking an advanced blockchain analysis system that can monitor digital asset activity in real time and retroactively. The platform will support regulatory investigations, identify suspicious transactions, and strengthen compliance oversight as the country\'s crypto licensing framework is gradually implemented.

According to the tender specifications, the system must support Bitcoin, Ethereum and at least 20 other blockchain networks. The system will automatically generate alerts for high-risk wallets, abnormally large transfers, currency mixers, dark network-linked addresses, and entities in the United Nations and Office of Foreign Assets Control sanctions databases.

Regulators also want software to have the ability to map wallet relationships, reconstruct transaction history, track funds across multiple blockchains, and assign risk scores for activities such as money laundering, ransomware, fraud and terrorist financing. In addition, CMA plans to use the platform to identify the cryptocurrency exchanges most commonly used by Kenyan residents and to detect offshore platforms that serve local users without regulatory approval.

Monitoring tools support implementation of new encryption regulations

This surveillance purchase was made after Kenya launched its first comprehensive legal framework for digital assets. President William Ruto signed the Virtual Asset Service Providers Act into law in October last year, and the law took effect the following month.

The law divides regulatory responsibilities between the Central Bank of Kenya and the CMA. The central bank oversees payment services, stablecoins and custodian wallet providers, while the CMA oversees cryptocurrency exchanges, brokers, investment advisers and tokenization platforms. Kenya is aligning its regulatory framework with anti-money laundering standards developed by the Financial Action Task Force.

Although the legal framework is in effect, no crypto company has been licensed to date. In March this year, the Ministry of Finance issued draft regulations stating that existing operators must meet new compliance requirements by November 2026.

Earlier this year, Kenya\'s Finance Bill 2026 introduced additional reporting obligations for virtual asset service providers. Under the proposal, crypto companies would be required to submit annual reports to the Kenya Revenue Authority containing information on reportable users and controllers. At the same time, according to analysis released by KPMG Kenya, Kenya will be able to exchange virtual asset transaction data with foreign tax authorities in accordance with international reporting standards.

Kenya joins the global regulatory ranks using blockchain analytics

The features listed in the CMA tender are highly consistent with commercial blockchain smart platforms provided by companies such as Chainalysis, TRM Labs and Elliptic, which supply transaction monitoring software to regulators and law enforcement agencies in multiple countries.

Kenya remains one of the largest cryptocurrency markets in Africa. According to Chainalysis data, between July 2024 and June 2025, Kenyan users received approximately US$19 billion in cryptocurrency, ranking fourth on the African continent. The report also estimates that more than 6 million Kenyans use digital assets, with a large proportion of that activity conducted through peer-to-peer trading channels.

Similar blockchain monitoring tools are already in use in other regions. In the United States, Immigration and Customs Enforcement last year purchased forensic software from TRM Labs and Chainalysis, which already provide services to agencies such as the FBI, Drug Enforcement Administration and Internal Revenue Service. UK Revenue and Customs has also signed up with TRM Labs to assist in tracking suspicious cryptocurrency transactions.