Africa's Crypto Crackdown Deepens as Kenya, South Africa Tighten Oversight

African regulators are tightening oversight of cryptocurrencies as governments race to balance innovation with growing concerns over illicit financial flows, money laundering and investor protection.

• On Monday, South Africa's National Treasury and the South African Reserve Bank (SARB) published a draft Crypto Assets Manual for Cross-Border Activities, proposing stricter reporting requirements for cross-border crypto transactions.
• The framework seeks to close regulatory loopholes, detect illicit financial flows and establish clear reporting obligations for authorised crypto asset service providers. 
• While South Africa is refining rules governing cross-border crypto transactions and reporting, Kenya is investing in surveillance technology before issuing licences to virtual asset service providers.

Under South Africa's proposed framework, crypto asset transfers between domestic and offshore service providers would become reportable to the country's Financial Surveillance Department, with regulators emphasising that the measures are intended to strengthen oversight of cross-border financial activities without recognising cryptocurrencies as legal tender. 

Meanwhile, Kenya's Capital Markets Authority (CMA) is currently procuring a a blockchain analytics system capable of tracking cryptocurrency transactions, identifying suspicious activity and supporting regulatory enforcement. While every transaction is publicly recorded, identifying the individuals behind digital wallets requires specialised analytics capable of linking wallet addresses, tracing transaction histories and assigning risk profiles.

Blockchain analytics software has become an essential regulatory tool globally, allowing authorities to trace digital asset movements across public blockchains, identify wallets linked to money laundering, terrorism financing, ransomware payments and sanctions evasion, and provide actionable intelligence to financial investigators.

The investment comes as Kenya begins implementing the Virtual Assets Service Providers (VASP) Act, 2025, which took effect on November 4, 2025, creating the country's first legal framework for regulating virtual asset service providers. 

The law designates the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) as the regulators responsible for licensing, supervising and regulating virtual asset service providers. However, licensing has yet to begin because the National Treasury is still finalising implementing regulations. As a result, no virtual asset service provider has been licensed to operate in or from Kenya under the new law. 

For years, Kenya adopted a cautious approach to cryptocurrencies, with the Central Bank repeatedly warning that virtual currencies were neither legal tender nor regulated financial products. Despite those warnings, adoption continued to grow, fuelled by the country's vibrant fintech ecosystem, widespread mobile money penetration and increasing demand for alternative investment assets.