Kenya's cryptocurrency industry is raising alarms over proposed Virtual Asset Service Providers (VASP) regulations that could potentially exclude startups from the market. The draft rules, prepared by the National Treasury, require firms to hold significant paid-up capital before obtaining licenses, with stablecoin issuers needing up to $3.86 million. Industry representatives argue that these thresholds could concentrate the market among well-funded firms and push users toward offshore platforms. The Virtual Asset Association of Kenya (VAAK) has expressed concerns that the capital demands, along with insurance and compliance costs, could drive startups out of the formal market. This, they warn, might undermine consumer protection goals by encouraging the use of unregulated platforms. The draft regulations, which also mandate oversight by the Central Bank of Kenya and the Capital Markets Authority, are open for public feedback until April 10, 2026. Kenyan authorities assert that the rules are necessary to protect investors and stabilize the rapidly growing crypto sector.