Peer-to-peer (P2P) crypto trading in Kenya sits on a line that the Virtual Asset Service Providers Act, 2025 draws sharply but quietly. Buying and selling virtual assets for your own account, even peer-to-peer through a marketplace, is not by itself a licensed activity. The Act licenses people who provide services to others, not individuals who trade their own coin. So a Kenyan who buys USDT from another person on a P2P board and sells it on later is not, on the face of the Act, operating an unlicensed VASP. The moment you cross from trading your own position to running the marketplace, matching other people’s orders, holding their funds in escrow, or quoting two-way prices to the public as a business, you are very likely carrying on a licensed activity (an exchange or a broker) and you need a licence you cannot yet get. That second activity is what section 8(2) prohibits without a licence, and the holding-out limb of that section catches you even before you process a single trade.

Short answer

Yes, trading peer-to-peer for yourself is not prohibited. The VASP Act regulates a defined set of “virtual asset services” and assigns each to a regulator. Those activities are things you do for other people: running an exchange, brokering trades, advising, managing portfolios, custody, payment processing, stablecoin issuance. None of the eleven activities in the First Schedule is “buying and selling virtual assets for your own account”.

A “virtual asset service provider” is defined in section 2 as “a company licensed under this Act to carry on the business of virtual asset services”. Two things follow. First, the label attaches to a company, and only once licensed. Second, the activities that require a licence are the service activities, not personal trading. An individual swapping their own crypto with a counterparty, whether directly or through a P2P listing on a larger platform, is acting as a customer of the market, not as a provider to it.

That is the narrow good news. The rest of this guide is the line you must not cross, and the duties that apply to you even when you stay on the right side of it.

For the full framework behind all of this, see our pillar on VASP licensing in Kenya.

When does P2P crypto trading need a VASP licence?

The licence question turns on whether you are providing a service to other people for a business purpose. The Act licenses activities, not firms, so the test is functional. Ask what you are actually doing.

You are likely carrying on a licensed activity if you:

You are likely still on the personal-trading side if you buy and sell only your own position, you do not hold anyone else’s money or coin, you do not match other people’s orders, and you do not advertise a facilitation service to the public.

The hard cases live in the middle. A “P2P merchant” who runs high volumes, advertises rates on social media, and offers to “help people buy and sell” is functionally brokering, even if every trade looks like a personal sale. Substance governs. The Act repeatedly tells the regulators to look at function over label, most explicitly in the NFT carve-out in section 4(2)(d), and the same logic applies to anyone dressing a broking business up as personal trades.

What is the “holding out” risk under section 8(2)?

This is the trap that catches founders before they have done anything operational. Section 8(2) provides: “A person shall not carry on, or purport to carry on, the business of virtual asset services, or hold itself out as carrying on that business in or from Kenya, unless that person is licensed to do so by the relevant regulatory authority under this Act.”

Read that carefully. There are three distinct prohibitions in one sentence:

The third one bites on marketing alone. If you advertise a P2P exchange or a facilitation service, set up a landing page, open a Telegram or WhatsApp group offering to match buyers and sellers, or describe yourself as a crypto trading service, you can be “holding out” as a VASP even before your first matched trade. Because you cannot get a licence in Kenya yet, there is no lawful way to make that representation right now. Anyone marketing themselves today as a licensed or soon-to-be-licensed P2P service is, on the regulators’ own joint position, misrepresenting.

All three limbs carry the same penalty band, set out below. The holding-out limb means the offence can be complete the day you publish the advert, not the day you take the money.

What are the penalties for running an unlicensed P2P platform?

The penalty for unlicensed operation is the largest in the Act. Section 40(3) sets it: for an individual, a fine not exceeding KES 10,000,000 or imprisonment for a term not exceeding five years, or both; for a company, a fine not exceeding KES 25,000,000.

That band applies to all three limbs of section 8(2) equally. Carrying on an unlicensed P2P exchange, purporting to, and holding out all attract the same exposure.

Section 41 then reaches the people behind the company. A director, partner or senior officer who “knowingly authorised, permitted or aided” the contravention is personally liable for the same criminal, civil or administrative penalty as the company. The mental element matters: it is knowledge plus one of those three acts. Pure negligence or a genuine “I did not know” is, on the face of section 41, a narrower hook than the classic “consent, connivance or neglect” formula. But anyone who deliberately builds and runs a P2P facilitation business without a licence is squarely inside “knowingly”, and the personal fine and prison exposure follow them, not just the company.

For the wider enforcement picture, see unlicensed VASP penalties Kenya.

Can you get a P2P platform licence in Kenya right now?

No. This is the structural problem for anyone wanting to run a compliant P2P exchange or broking service in Kenya today.

The VASP Act is in force. The Regulations that carry the licence forms, fees and prudential thresholds are not. The CBK and CMA confirmed jointly on 18 November 2025 that no VASP has been licensed and that licensing will only begin once the Cabinet Secretary’s Regulations are issued. A draft set, the Virtual Asset Service Providers Regulations, 2026, was published for comment on 17 March 2026, with public participation running to 10 April 2026, but it had not been gazetted as of 30 June 2026.

So a would-be P2P platform operator is in a bind. The exchange or broker activity is a licensed activity. The licence channel is not open. And the transitional window in section 47 gives existing operators only until 4 November 2026 to come into compliance. The honest planning position is: scope the file now, do not market a facilitation service while unlicensed, and be ready to apply the moment the channel opens. See VASP compliance deadline Kenya for how to read the transitional clock, and crypto exchange license Kenya for what an exchange-track application looks like.

What AML duties apply to P2P crypto traders?

This is the part most P2P traders do not see coming, and it is already live.

The VASP Act amended the Proceeds of Crime and Anti-Money Laundering Act (Cap. 59A) so that every VASP is a “reporting institution” from 4 November 2025. If you run a P2P platform or broking service that meets the VASP definition, the full POCAMLA regime lands on you regardless of whether the VASP Regulations have been gazetted:

A pure personal trader is not a reporting institution and does not carry these duties as a VASP. But high-volume individual P2P trading carries a different kind of exposure. If your activity is funnelling other people’s funds, or your volumes look like a business, you risk being treated as conducting a service, and separately you risk being a conduit for laundered funds, which can draw scrutiny under POCAMLA’s general offences and freeze your bank and exchange accounts even without a VASP characterisation. Kenya is working to exit the FATF grey list it entered in February 2024, and banks and exchanges are tightening sharply on crypto-linked flows. See crypto AML and KYC Kenya for the build-out.

How is P2P crypto trading taxed in Kenya?

The tax position has just been rewritten, and a lot of online commentary is out of date.

The 3% Digital Asset Tax that the Finance Act 2023 inserted as section 12F of the Income Tax Act was repealed by the Finance Act 2025. Anyone still quoting a 3% tax on the gross value of your P2P trades in 2026 is citing repealed law.

The live tax since 1 July 2025 is a 10% excise duty on the fees a virtual asset provider charges, inserted into the First Schedule, Part II of the Excise Duty Act (Cap. 472) by the Finance Act 2025. The key point for P2P: this duty is on the platform’s or facilitator’s fee, not on the value you transfer. If you run a P2P facilitation service and charge a fee or a spread, that fee is the excisable base. If you are simply a personal trader paying someone else’s fee, the duty sits on the provider, not on your trade value.

On gains, there is no bespoke statutory crypto capital-gains regime in the current consolidated Income Tax Act. Whether your P2P profits are taxable, and how, depends on the facts: a genuine investor holding and disposing occasionally is in a different position from a high-frequency P2P merchant whose activity looks like a trade or business, where profits can be ordinary income. This is fact-specific and worth a proper pass. See crypto tax Kenya for the detail.

Frequently asked questions

Is buying USDT from another person on a P2P board illegal in Kenya? No. Buying and selling virtual assets for your own account, including peer-to-peer, is not one of the licensed activities under the VASP Act. The Act regulates people who provide services to others (exchanges, brokers, advisers, custodians), not individuals trading their own position.

At what point does my P2P trading need a licence? When you stop trading only your own coin and start providing a service: running the marketplace, matching other people’s trades, holding client funds in escrow, or quoting two-way prices to the public as a standing business. Those are exchange or broker activities under the First Schedule, supervised by the CMA, and they need a licence.

I am a “P2P merchant” with high volumes and I advertise my rates. Am I exposed? Likely yes. Volume and public advertising of a facilitation service push you toward being a broker in substance, and the holding-out limb of section 8(2) can catch the advertising itself. The Act looks at function, not the label you give your activity. Get the structure reviewed before you scale.

What is the penalty if I run an unlicensed P2P platform? For a company, a fine up to KES 25,000,000. For an individual, a fine up to KES 10,000,000 or up to five years imprisonment, or both. A director or senior officer who knowingly authorised, permitted or aided the breach is personally liable for the same penalty.

Can I just get licensed to run a compliant P2P exchange? Not yet. The Regulations carrying the licence forms and fees are still in draft and had not been gazetted as of 30 June 2026. CBK and CMA confirmed no VASP has been licensed. You can scope and prepare a file now, but you cannot lawfully market a P2P facilitation service while unlicensed.

Do AML rules apply to me as a personal P2P trader? The VASP reporting-institution duties (CDD, monitoring, STRs, FRC registration) apply to VASPs, not to pure personal traders. But high-volume P2P activity can still draw POCAMLA scrutiny, and banks and exchanges are tightening on crypto-linked flows. If your activity touches other people’s funds, treat the line carefully.

Is there still a 3% tax on my P2P trades? No. The 3% Digital Asset Tax was repealed by the Finance Act 2025. The current tax is a 10% excise duty on the fees a virtual asset provider charges, which falls on the platform or facilitator’s fee, not on your transaction value. Whether your gains are otherwise taxable depends on whether your activity is investment or a trade.

I want to run a P2P escrow service. Is that custody? Holding client coin while a trade clears engages the segregation and client-asset duties in section 31, and depending on structure can require a CBK custodial wallet licence on top of the CMA broker or exchange licence. Escrow is one of the fastest ways to convert a “facilitation” idea into a fully licensed, fully prudential business.

Talk to a fintech lawyer before you scale

If you are running P2P volumes that look like a business, building a P2P platform, or planning a compliant exchange or broking service for Kenyan users, the line between lawful personal trading and an unlicensed VASP is exactly where the KES 25,000,000 and five-year exposure lives. We help traders, founders and platforms read that line for their specific model, build the AML and tax position, and prepare a licence file for the moment the channel opens.

Book a consultation and we will scope your situation properly.

Related reading: VASP licensing in Kenya, crypto exchange license Kenya, unlicensed VASP penalties Kenya, crypto AML and KYC Kenya, crypto tax Kenya, and fintech lawyer Kenya.