Kenya has established itself as one of Africa’s leading digital finance markets, driven largely by the rapid adoption of mobile money services and fintech innovation. Platforms such as M-Pesa and Airtel Money have transformed how individuals and businesses transact, making digital payments widely accessible and significantly improving financial inclusion. As digital financial infrastructure continues to evolve, new technologies are emerging that could further reshape the country’s financial ecosystem. One such innovation is stablecoins, a category of digital assets designed to maintain a stable value relative to an underlying asset, most commonly a fiat currency such as the US dollar. Stablecoins combine the efficiency and transparency of blockchain technology with price stability, enabling them to function as a potential medium of exchange, store of value, and settlement asset within digital financial systems.

Globally, stablecoins have become an increasingly important component of the cryptocurrency ecosystem, supporting activities such as digital asset trading, decentralized finance, and cross-border payments. Their use has grown significantly in recent years as individuals and institutions seek faster and more cost-effective methods of transferring value across borders. For emerging markets such as Kenya, stablecoins could present several potential opportunities. These include reducing the cost of international remittances, supporting digital commerce, improving cross-border payments in terms of speed of transactions and costs, and enhancing access to financial services for individuals who may not be fully served by traditional banking systems.

This topical examines the global stablecoin market, the different types of stablecoins and how they function, the key players in the industry, and the potential applications of stablecoins within Kenya’s digital economy. It also reviews the evolving regulatory landscape globally and within Kenya, highlighting considerations that policymakers may need to address as digital asset adoption continues to expand. This discussion is structured into the following sections:

1. Introduction to Stablecoins
2. Overview of the Global Stablecoin Market
3. Types of Stablecoins and Their Mechanisms
4. Potential Applications of Stablecoins in Kenya
5. Global regulatory landscape
6. Regulatory landscape in Kenya
7. Recommendation and Conclusion

Section I. Introduction to Stablecoins

Stablecoins are a category of digital assets designed to maintain a stable value by being pegged to an underlying asset, most commonly a fiat currency such as the US dollar. Unlike traditional cryptocurrencies such as Bitcoin and Ethereum, which experience significant price volatility, stablecoins aim to provide price stability while retaining the advantages of blockchain technology. While there are many types of stablecoins, they typically fall into one of three categories: fiat backed stablecoins, crypto-backed stablecoins, algorithmic stablecoins and commodity backed stablecoins. Further definitions of these categories are provided in section III.

Over the past decade, stablecoins have emerged as one of the fastest-growing segments of the cryptocurrency ecosystem. Their growth has been driven by increasing demand for digital payments, decentralized finance (DeFi), and cross-border financial transactions. By combining the efficiency of blockchain technology with price stability, stablecoins serve as a bridge between traditional financial systems and the digital asset economy. The chart below shows the global average supply of stable coins since 2019;

Source: VISA Onchain Analytics

Stablecoin supply refers to the total number of stablecoin units currently in circulation, designed to be directly tied to the reserve assets backing them to maintain their price stability. The global supply of stablecoins has grown significantly over the past seven years, increasing from USD 1.8 bn in 2019 to USD 271.0 bn in 2026 YTD, representing a compound annual growth rate (CAGR) of 116.8% in the 7-year period between 2019 and 2026. The expansion accelerated particularly between 2020 and 2022, as stablecoins gained popularity within cryptocurrency trading and decentralized finance ecosystems, rising from USD 11.6 bn to USD 126.6 bn over the period. Although there was a slight contraction in 2023 to USD 119.1 bn but the market quickly rebounded, reaching USD 233.2 bn in 2025 and continuing to expand to USD 270.9 bn in 2026 YTD. This shows the rapid and sustained growth of stablecoins globally, highlighting their increasing importance as liquidity instruments in digital asset markets and their growing role in facilitating payments, trading, and decentralized financial services.

Globally, stablecoins are increasingly being used for trading, payments, remittances, and decentralized financial services. In emerging markets such as Kenya, stablecoins may offer opportunities to enhance financial inclusion, reduce the cost of international transfers, and support the growth of digital commerce. Kenya already has one of the most advanced digital financial ecosystems in Africa, largely due to the widespread adoption of mobile money services such as M-Pesa. The integration of stablecoins within this ecosystem could further expand the country’s digital financial capabilities.

Main Stablecoin Companies

Stablecoin companies are firms that issue and manage stablecoins, which are digital currencies designed to maintain a stable value. They create these tokens on blockchain networks and typically peg them to real world assets such as the US dollar to reduce price volatility. To support this value, the companies hold reserves such as cash, government securities, or other liquid assets that back the stablecoins in circulation. They also manage the systems that allow users to issue, redeem, transfer, and store the tokens for payments, trading, and cross border transactions. The table below shows the top 10 stablecoin companies by marketcap as at 13^th March 2026:

Source: Forbes

Tether dominates the market with a capitalization of USD 184.0 bn, accounting for 61.4% of the total stablecoin supply, underscoring its position as the primary liquidity provider across most stablecoin exchanges and decentralized finance platforms. It is followed by USD Coin (USDC), which holds USD 78.8 billion or 26.3% of the market, giving the top two issuers a combined market share of nearly 88.0%, indicating a highly concentrated industry. While USDT enjoys more liquidity and has been around for longer, USDC is seen as more transparent and regulatory compliant hence more trusted. The remaining stablecoins including USDS, Ethena USDe, Dai, and PayPal USD, each account for relatively small shares, individually below 4.0% of the market. This distribution shows that while several alternative stablecoins exist, the market is overwhelmingly dominated by a few large issuers, with smaller players collectively making up only a minor portion of the ecosystem.

Section II. Overview of the Global Stablecoin Market

Stablecoins first emerged in the mid-2010s as a solution to the price volatility associated with cryptocurrencies such as Bitcoin. One of the earliest and most widely recognized stablecoins, Tether (USDT), was launched in 2014 by the company Tether Limited. The project was initially developed by entrepreneurs Brock Pierce, Reeve Collins, and Craig Sellars, with early operational links to the crypto exchange Bitfinex. The stablecoin was created in the United States, and its core idea was to maintain a 1:1 peg with the U.S. dollar, allowing users to transact on blockchain networks while avoiding large price swings.

As of 13^th March 2026, the global stablecoins market capitalization stood at USD 315.4 bn with the USDT dominating at 58.3% with a market cap of USD 183.9 bn. The USDT (Tether) is a stablecoin pegged to the US dollar designed to maintain price stability in the volatile cryptocurrency market by being backed by Tether's dollar reserves.

Stablecoin participation varies significantly by country, with the highest adoption occurring in economies experiencing currency volatility, high remittance flows, or strong demand for dollar-denominated assets. Countries such as Nigeria, India, Argentina, Brazil, and Turkey are among the most active users of stablecoins, largely driven by inflationary pressures, exchange-rate instability, and limited access to foreign currency. In these markets, stablecoins are increasingly used for remittances, savings in U.S. dollar equivalents, and digital payments.

Source: Allium

There has been a sharp expansion in global stablecoin transaction volume between 2019 and 2025. Volumes increased from approximately USD 0.1 tn in 2019 to about USD 10.9 tn in 2025, reflecting extremely rapid adoption of stablecoins across digital finance and payments. This represents a compound annual growth rate (CAGR) of 118.0% over the six-year period, indicating that transaction activity more than doubled on average each year. Growth accelerated particularly after 2020, with volumes rising from USD 0.6 tn in 2020 to USD 3.4 tn in 2021 and continuing upward to USD 5.7 tn in 2024 before reaching the peak of USD 10.9 tn in 2025. Although 2023 experienced a slight dip to USD 3.7 tn, the overall trajectory remained strongly upward, highlighting sustained adoption of stablecoins in global financial activity. The 2026 year-to-date volume of USD 3.5 tn suggests continued momentum, though the final yearly total will depend on activity in the remaining months.

As per the latest published report, the United States records the highest transaction volume at 66.3 USD bn, significantly exceeding the other countries shown. It is followed by India with 22.8 USD bn, and Nigeria at 21.8 USD bn. Russia ranks next with 19.2 USD bn, while Ukraine records 13.8 USD bn. Slightly lower but comparable transaction volumes are observed in Brazil and South Korea, both at 11.7 USD bn, followed by Turkey at 11.6 USD bn. Overall, the chart highlights a substantial gap between the United States and the remaining countries, while most others cluster within a narrower range of approximately 9.2–22.8 USD bn in transaction volume as shown below:

Source: Statista.com, As at September 2024

Today, stablecoins play several key roles within the cryptocurrency ecosystem which include.

1. They provide liquidity in digital asset trading. Cryptocurrency exchanges commonly use stablecoins as trading pairs, allowing traders to move funds quickly without converting into fiat currencies.
2. Stablecoins are widely used within decentralized finance platforms. These platforms allow users to lend, borrow, and earn yields on digital assets without the need for traditional financial intermediaries.
3. Stablecoins are increasingly used for payments and cross-border transfers. Blockchain-based transfers can be completed within minutes and often at significantly lower costs compared to traditional international banking systems.

Section III. Types of Stablecoins and Their Mechanisms

Stablecoins can generally be categorized into four main types based on the mechanisms used to maintain their price stability.

1. Fiat-Backed Stablecoins

Fiat-backed stablecoins are supported by reserves of traditional currency held by the issuing organization. Each stablecoin is typically pegged 1:1 to a fiat currency and backed by an equivalent amount of fiat currency, such as the US dollar or Euro, held in bank accounts or short-term financial instruments, which act as collateral. Examples include the Tether (USDT), USD Coin (USDC) and Euro Coin (EURC). This model is widely used because it provides relatively strong price stability and is easier for users to understand.

2. Crypto-Backed Stablecoins

Crypto-backed stablecoins are supported by cryptocurrency collateral rather than fiat currency reserves. Because cryptocurrencies can be highly volatile, these stablecoins typically require over-collateralization. This means users must deposit cryptocurrency worth more than the stablecoins they receive. A notable example is DAI which is backed by cryptocurrency such as Ethereum. This model promotes decentralization but introduces risks related to volatility in the collateral assets.

3. Algorithmic Stablecoins

Algorithmic stablecoins attempt to maintain price stability through automated supply and demand adjustments rather than collateral reserves. Algorithms increase or decrease the supply of tokens depending on market demand in order to maintain the target price. Because these systems do not hold enough collateral to fully back every coin in circulation, they depend heavily on accurate and reliable market price data. This data helps the system determine when the price has moved away from the intended peg and triggers the mechanisms that restore the stablecoin’s value. However, algorithmic stablecoins have proven to be more vulnerable to market instability, as demonstrated by the collapse of TerraUSD in 2022.

4. Commodity backed stablecoins

Commodity-backed stablecoins are a type of digital currency whose value is directly pegged to a tangible asset or commodity, such as gold, oil, or other precious metals. Unlike fiat-backed stablecoins, which are supported by government-issued currencies, commodity-backed stablecoins derive their stability and intrinsic value from the underlying physical asset, which is held in reserve by the issuer. This backing provides investors and users with a hedge against currency volatility and inflation, as the coin’s value is linked to a real-world store of value. By combining blockchain technology with the security of tangible assets, these stablecoins aim to offer price stability, transparency, and trust, enabling their use for payments, remittances, or investment purposes in both domestic and cross-border markets.

Section IV. Potential Applications of Stablecoins in Kenya’s Digital Payments Ecosystem

Stablecoins could have several important applications within Kenya’s digital financial system which may include:

1. Cross-Border Remittances

Kenya receives significant remittance inflows from its diaspora community each year. In the month of February 2026 diaspora remittances came in at USD 412.7 mn. Traditional remittance channels can involve high transaction costs and delays.  Stablecoins could reduce these costs by enabling direct peer-to-peer transfers through blockchain networks. Diaspora workers could send stablecoins to recipients in Kenya, who could then convert them into Kenyan shillings through digital exchanges or mobile money platforms. The introduction of the remittance taxes by the US provides an opportunity for the use of stablecoins to reduce the costs. Stablecoins can also be used for payment in imports and exports and payment for remote work. Stablecoins can also facilitate payments for imports and exports by enabling faster and lower-cost cross-border transactions compared to traditional banking systems. Businesses can settle international trade payments instantly without relying on correspondent banks or facing delays in foreign currency conversions.

Source: Chainalysis, As at September 2024*

Kenya recorded stablecoin inflows of USD 3.3 bn as at September 2024, making it the fourth-largest recipient among the selected African countries. While the figure is significantly lower than the leading markets Nigeria (USD 21.8 bn) and South Africa (USD 13.5 bn), Kenya still ranks just behind Ghana (USD 3.9 bn) and ahead of Zambia (USD 2.2 bn), Ethiopia (USD 2.0 bn) and Uganda (USD 0.7 bn). This positioning highlights Kenya’s role as a key stablecoin market in East Africa, likely supported by the country’s advanced digital payments ecosystem and high mobile money penetration. The relatively strong inflows suggest growing use of stablecoins for remittances, cross-border transactions, and digital asset trading

2. Digital Payments

Stablecoins could also support digital payments for goods and services. Businesses could accept stablecoin payments for international transactions, reducing reliance on costly card networks or international bank transfers.

Source: Central Bank of Kenya

The number of mobile money accounts increased by 8.4% overall to 90.4 mn in January 2026 from 83.4 mn in January 2025, indicating steady growth during the period. In 2025, accounts rose gradually to 86.0 mn in April 2025, before slightly declining to 85.6 mn in May 2025 and 84.2 mn in June 2025. Growth resumed thereafter, reaching 85.8 mn in July 25 and 87.5 mn in August 25, followed by a minor dip to 87.0 mn in September 2025. The upward trend continued in the final quarter, increasing to 87.9 mn in Oct-25, 89.1 mn in Nov-25, and 89.5 mn in Dec-25, before peaking at 90.4 Mn in Jan-26.

Stablecoins could be integrated into the digital payments ecosystem in Kenya by linking them with existing mobile money platforms. Through partnerships between fintech firms and mobile network operators, users could convert funds in their mobile wallets into stablecoins pegged to major currencies such as the US dollar. This would enable faster and lower-cost cross-border payments and remittances while still allowing users to transact locally through mobile money.

3. Integration with Mobile Money

Kenya’s advanced mobile money infrastructure, led by platforms such as M-Pesa, provides a strong foundation for integrating stablecoin-based services. Stablecoin wallets could potentially be linked to mobile money accounts, allowing users to convert between stablecoins and Kenyan shillings quickly and efficiently.

In January 2026 M-pesa Africa signed a partnership with the Abu Dhabi–based ADI Foundation to introduce stablecoin-powered payments and blockchain infrastructure across its mobile money network in several African markets. The collaboration will deploy the ADI Chain blockchain system to enable faster and cheaper cross-border transactions for individuals and businesses, potentially linking more than 60 million monthly users to digital asset services. The deal marks M-Pesa’s first major move into blockchain and crypto-related payments, coming after years of caution due to regulatory concerns in Kenya. The initiative is expected to support remittances, regional trade, and merchant payments, while operating within new regulatory frameworks such as Kenya’s Virtual Asset Service Providers (VASP) Act, which requires licensing and compliance for stablecoin service providers.

4. Corporate Settlement and Treasury Management

Repatriation of Funds: Multinational companies operating in Kenya are increasingly using US dollar-pegged stablecoins as an efficient way to convert local revenues and repatriate funds to their parent companies abroad. In this model, firms collect payments locally in Kenyan shillings (Kshs) often through mobile money or local payment systems, then convert the proceeds into stablecoins such as USDT or USDC via crypto payment infrastructure providers. These digital dollars can then be transferred instantly across borders and converted back into fiat currency in the destination country, significantly reducing the time and cost associated with traditional bank wires and foreign exchange conversions. The internet service provider Starlink, owned by US tycoon Elon Musk, has previously converted payments collected in Kenyan shillings into stablecoins and transferred them to America, where they are exchanged into dollars

Stable Payroll: With the enactment of the Virtual Asset Service Providers (VASP) Act, firms can offer regulated, stablecoin-based payrolls with automatic conversion to local currency for employees. This could specifically work for people with remote jobs or Kenyan companies with foreign employees abroad

5. Financial Inclusion

Stablecoins may also support financial inclusion by providing digital financial services to individuals who lack access to traditional banking infrastructure but have access to smartphones and internet connectivity. USD-pegged stablecoins also serve as a practical hedge against inflation and depreciation of the Kenyan shilling (Kshs). Because these digital assets are typically backed 1:1 by the US dollar, their value remains relatively stable compared to local currencies that may experience volatility. As a result, individuals and businesses in Kenya can convert their Kshs holdings into stablecoins to preserve purchasing power, particularly during periods when the shilling weakens against the dollar. This makes stablecoins attractive not only for cross-border transactions and remittances but also as a store of value in dollar terms without requiring access to traditional foreign currency accounts. Additionally, stablecoins can significantly expand financial inclusion by enabling unbanked or underbanked individuals, who may not have access to formal banking services, to participate in the digital economy. With just a smartphone and an internet connection, users can hold digital wallets, receive payments, transact globally, and store value in a dollar-linked asset, thereby accessing financial services that would otherwise be unavailable through conventional banking channels.

Section V. Global Regulatory Landscape

The regulatory landscape for stablecoins has evolved rapidly in recent years as governments and financial authorities respond to the growing adoption of digital assets in global payments and financial markets. As stablecoins increasingly serve as a bridge between traditional finance and the crypto ecosystem, regulators across major jurisdictions have begun introducing dedicated frameworks to address potential risks while supporting innovation. These frameworks typically focus on areas such as consumer protection, reserve transparency, financial stability, and anti-money laundering compliance. The table below highlights key regulatory developments across major markets, illustrating how different regions are approaching the oversight of stablecoins and integrating them into existing financial regulatory structures.

The global regulatory landscape for stablecoins keeps evolving, showing how major economies are establishing formal frameworks to govern their issuance, use, and oversight.

1. In the United States, the Genius Act 2025 has been signed into law, placing stablecoins under clearer federal oversight involving agencies such as the OCC, FinCEN, and FDIC. It stated that stablecoins must be fully backed 1-to-1 by safe assets like U.S. dollars or short-term U.S. Treasury bonds, and the companies issuing them must regularly disclose their reserves and follow strict regulations. The law also requires transparency, consumer protections, and anti-money-laundering compliance, while making it illegal to claim that stablecoins are government-guaranteed, insured, or legal tender. Overall, the act aims to make stablecoins safer and more trustworthy while allowing them to be used as a regulated digital payment system.
2. The European Union has already implemented the Markets in Crypto Assets (MiCA) regulation, which has been live since June 2024 and provides a comprehensive framework across all member states with supervision coordinated by ESMA requiring crypto issuers and service providers to obtain authorization, meet capital and consumer-protection standards, publish transparent white papers, and comply with strict rules for stablecoins, reserve backing, and supervision by EU regulators, all aimed at improving market stability, investor protection, and regulatory clarity across the EU crypto market.
3. In the United Kingdom, stablecoin regulation is still in development under the proposed Cryptoassets Regulations tied to the Financial Services and Markets Act. This act proposes bringing stablecoins under formal financial regulation by treating certain types, particularly fiat backed “qualifying stablecoins”, as regulated financial instruments. The framework requires firms that issue, manage, or provide custody services for stablecoins to obtain authorization from financial regulators and comply with rules on consumer protection, reserve backing, and operational oversight. It also allows stablecoins to be legally used as a form of payment while ensuring they are backed by assets and supervised similarly to other financial services to maintain financial stability and protect users.
4. Meanwhile, several Asian financial hubs have moved ahead with operational frameworks: Singapore’s MAS framework has been active since August 2023, Hong Kong’s Stablecoin Ordinance came into force in August 2025, and the UAE’s payment token regulation has been live since August 2024. Japan has also updated its Payment Services Act, introducing crypto-related regulatory changes in 2025.

Overall, the table illustrates a global shift toward formalizing oversight of stablecoins within existing financial regulatory structures. These regulatory frameworks focus primarily on consumer protection, reserve transparency, anti-money laundering compliance, and financial stability. Going forward, the regulatory trend suggests that stablecoins are increasingly being integrated into the mainstream financial system rather than treated as purely crypto assets. More jurisdictions are likely to adopt frameworks similar to MiCA or payment-focused regulatory models that emphasize consumer protection, reserve backing, transparency, and prudential supervision. As regulatory clarity improves, institutional participation and cross-border stablecoin use in payments, remittances, and financial markets could expand significantly. However, regulatory fragmentation across jurisdictions may still pose challenges for global issuers, making international coordination and standard-setting an important next step in the development of the stablecoin ecosystem.

Section VI. Regulatory Landscape in Kenya

The Central Bank of Kenya has not issued a dedicated press release on stablecoins but has acknowledged their emergence in official publications. In its 2022 Central Bank Digital Currency discussion paper, CBK noted that private digital currencies such as cryptocurrencies and stablecoins are reshaping global payment systems and have prompted central banks to explore Central Bank Digital Currencies (CBDCs). Earlier, CBK had issued a public notice in 2015 cautioning Kenyans against the risks of virtual currencies, noting that they are not legal tender and remain unregulated in the country.

a) Virtual Asset Services Providers Act 2025

The Virtual Asset Service Providers Act, 2025 is Kenya’s first comprehensive legal framework governing digital assets, including cryptocurrencies and stablecoins. The Act was passed by Parliament in October 2025 and subsequently assented to by the President later that month, formally establishing a regulatory structure for the country’s growing digital asset ecosystem. Its introduction reflects Kenya’s shift from a largely cautionary approach to virtual assets toward a more structured regulatory environment aimed at balancing financial innovation with consumer protection and financial stability.

A key feature of the Act is the establishment of a licensing regime for virtual asset service providers (VASPs), which includes entities such as crypto exchanges, custodial wallet providers, token issuers, and digital asset trading platforms. Under the framework, regulatory oversight is shared between the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA), depending on the nature of the activity. For stablecoins in particular, the Act introduces requirements related to operational transparency, anti-money laundering and counter-terrorism financing compliance, and the safeguarding of customer funds. These provisions aim to ensure that entities dealing with digital assets operate within clear regulatory boundaries.

The legislation also has important implications for the stablecoin market in Kenya, as it lays the groundwork for potential oversight of stablecoin issuance and usage within the financial system. Provisions relating to licensing, disclosure requirements, governance standards, and risk management are expected to apply to firms that issue or facilitate transactions involving stablecoins. By introducing clearer rules around digital asset service providers, the Act could help foster greater confidence among users and institutions while reducing risks associated with fraud, financial crime, and market instability. Over time, the framework may also support the integration of stablecoin-based services into Kenya’s broader digital payments and fintech ecosystem. CBK regulates the creation and management of approved stablecoins. CMA, on the other hand, oversees stablecoin exchanges and provides regulatory oversight of investment advisory services and virtual asset management. However, Kenyan regulators have also acknowledged the importance of financial innovation and the potential benefits of digital financial technologies.

Looking ahead, Kenya’s regulatory approach to stablecoins is likely to evolve gradually as digital asset adoption continues to grow both locally and globally. Policymakers are expected to take a cautious but progressive stance, balancing financial innovation with the need to safeguard financial stability and consumer protection. In the near term, regulators such as the Central Bank of Kenya may focus on strengthening oversight around anti-money laundering compliance, reserve transparency, and the operational standards of stablecoin issuers and service providers. There is also a possibility that stablecoins could eventually be integrated into the broader digital payments ecosystem, particularly given Kenya’s strong mobile money infrastructure. Over the longer term, regulatory clarity may emerge through dedicated digital asset legislation or through amendments to existing financial and payment regulations, helping create a more structured environment for stablecoin use, trading, and innovation within the country’s financial system.

Section VII. Recommendations and Conclusion

For Kenya to fully harness the benefits of stablecoins while safeguarding financial stability, several targeted policy and institutional measures should be considered.

1. Establish a Clear Regulatory Framework for Stablecoins

Kenya currently lacks a comprehensive regulatory framework governing stablecoin issuance, custody, and trading. The Central Bank of Kenya should develop a dedicated regulatory framework that defines the legal status of stablecoins and sets operational requirements for issuers and service providers.Such a framework should include requirements on: Reserve asset backing, liquidity management, risk disclosure, and consumer protection measures. Clear regulation would provide legal certainty for investors, fintech firms, and financial institutions seeking to develop stablecoin-based products.

2. Introduce Licensing for Stablecoin Service Providers

Kenya could introduce a licensing regime for firms involved in stablecoin-related activities such as issuance, trading platforms, custodial services, and payment processing. The licensing framework could be administered by the Capital Markets Authority and the Central Bank of Kenya through a coordinated regulatory approach. Licensing requirements should include: Minimum capital requirements, operational risk management, cybersecurity standards, compliance reporting obligations. This would help ensure that only credible and well-capitalized institutions operate in the stablecoin ecosystem.

3. Promote Integration with Mobile Money Infrastructure, PSPs and Money Market Funds

Kenya’s strong mobile money ecosystem provides a unique opportunity to integrate stablecoins into existing digital payment systems. Partnerships between stablecoin service providers and money platforms such as M-Pesa, PSPs and Money Market Funds could enable users to seamlessly convert stablecoins into Kenyan shillings and vice versa.

Such integration could significantly reduce the cost and processing time of cross-border payments while expanding access to digital financial services.

4. Strengthen Anti-Money Laundering and Financial Monitoring Systems

Stablecoins can facilitate fast cross-border transfers, which may create risks related to money laundering and illicit financial flows. To mitigate these risks, regulators should ensure that stablecoin service providers comply with the Anti-Money Laundering and Counter-Terrorism Financing regulations administered by the Financial Reporting Centre. Requirements should include: Know-Your-Customer (KYC) verification, transaction monitoring systems, blockchain analytics integration. These measures would help maintain the integrity of Kenya’s financial system.

5. Promote Public Awareness and Financial Literacy

Given the technical complexity of digital assets, public education will be essential for responsible adoption. Government agencies, financial institutions, and fintech firms should collaborate to raise awareness about the benefits and risks associated with stablecoins. Educational initiatives could focus on: Safe digital asset usage, fraud prevention, digital wallet security and responsible investment practices. Improving financial literacy would help consumers make informed decisions when engaging with stablecoin-based services.

6. Promote innovation around stable coins to ensure Kenya remains a leader in digital payments in Africa.

Kenya can strengthen its leadership in digital payments by actively promoting innovation around stablecoins through a multi-pronged approach. The government and regulators can create a supportive framework that encourages fintech startups and established financial institutions to experiment with new stablecoin-based payment solutions, while ensuring robust consumer protection and anti-money laundering safeguards. Initiatives such as innovation sandboxes, grants for blockchain and fintech research, and partnerships with global stablecoin players can accelerate adoption. Additionally, integrating stablecoins into existing mobile money platforms, like M-Pesa, and cross-border payment systems can enhance transaction efficiency, reduce costs, and provide financial access to the unbanked, positioning Kenya as a hub for digital payment innovation across Africa

Stablecoins represent an important innovation in the global financial system. By combining price stability with blockchain technology, they provide new opportunities for payments, cross-border transfers, and digital financial services. For Kenya, stablecoins could complement the country’s well-established digital payments ecosystem. The recent ADI Foundation–M-Pesa Africa partnership combined with the enactment of Kenya’s Virtual Asset Service Providers Act, 2025, positions the country’s stablecoin market at a transformative juncture. The partnership integrates blockchain-based settlement infrastructure into M-Pesa’s vast mobile money ecosystem, enabling efficient cross-border payments and expanding financial inclusion, while the VASP Act of 2025 provides a clear regulatory framework that ensures consumer protection, anti-money laundering compliance, and licensing oversight. Together, these developments signal a shift from unregulated experimentation toward a formalized, risk-aware stablecoin environment, creating opportunities for institutional adoption, innovation in payment systems, and Kenya’s potential emergence as a regional hub for digital asset-driven transactions.

Disclaimer: The views expressed in this publication are those of the writers where particulars are not warranted. This publication, which follows Section 2 of the Capital Markets Authority Act Cap 485A, is meant for general information only and is not a warranty, representation, advice or solicitation of any nature. Readers are advised in all circumstances to seek the advice of a registered investment advisor