Kenya’s growing cryptocurrency market is creating a new responsibility for financial regulators: determining what happens to digital wealth when its owners can no longer be traced or their assets remain unclaimed.

The Treasury wants cryptocurrencies and stablecoins brought under the country’s unclaimed financial assets framework, potentially placing dormant digital holdings under the management of the Unclaimed Financial Assets Authority (UFAA).

The proposal comes as the country develops a regulatory structure for virtual asset businesses, including cryptocurrency exchanges and stablecoin issuers. However, the administration of abandoned digital assets presents challenges that conventional financial institutions do not encounter when surrendering dormant bank deposits, insurance benefits or shares.

A bank can identify an inactive customer account through its records and transfer the corresponding balance under the applicable unclaimed assets legislation. Cryptocurrency held in a self-custody wallet operates differently. Access depends on private keys controlled by the owner, while the blockchain records transactions without necessarily identifying the person behind a wallet address.

The Treasury’s draft Unclaimed Financial Assets National Policy proposes reviewing the legal framework to cover a wider range of financial assets, including digital currencies. It argues that the existing framework inadequately covers near-cash and digital assets, creating valuation risks and ambiguity.

Digital asset ownership presents a new challenge for UFAA

The scale of Kenya’s cryptocurrency market provides an indication of why digital assets have entered the government’s policy discussions. Chainalysis estimates that Kenyans transferred Sh740 billion worth of cryptocurrencies in the year to June 2026, compared with Sh505 billion in the preceding year.

The increase represents a 46.5% rise in transaction value, although the figures measure activity rather than the total cryptocurrency holdings belonging to Kenyan residents.

An International Monetary Fund technical report also identifies Kenya as the fourth-largest cryptocurrency market in sub-Saharan Africa. One market participant cited in the report estimated that transactions reached Sh779.7 billion ($6 billion) in 2025, while another placed stablecoin transactions between Sh389.8 billion ($3 billion) and Sh519.8 billion ($4 billion).

The IMF report also records market participants’ assessment that retail activity accounts for approximately 90% of cryptocurrency transactions in Kenya, according to one estimate.

These figures suggest that the proposed changes could affect a market with substantial individual participation, rather than one dominated exclusively by institutional investors.

The draft policy proposes a broader definition of financial assets covering cash, near-cash, cash equivalents and other assets readily convertible into money. Its proposed categories include deposits, account balances, securities, dividends, insurance benefits, retirement benefits, payment instruments, refunds, overpayments, mobile money wallets and digital assets.

For cryptocurrency businesses, this could introduce additional obligations to identify qualifying dormant customer balances, maintain the necessary records and surrender assets under the revised legal framework.

The policy proposes reviewing, harmonising and strengthening the existing legislation to improve compliance, enforcement and the management of different asset classes. The Treasury has not, in the supplied policy extracts, established the detailed procedures through which individual cryptocurrency holdings would be surrendered.

Stablecoins complicate the question of unclaimed wealth

Stablecoins deserve particular attention because their use extends beyond cryptocurrency investment. Tokens linked to fiat currencies, particularly the US dollar, are used for international transfers, payments and holding value.

Their underlying arrangements also create custody and valuation questions that differ from those associated with conventional cryptocurrencies.

TechTrendsKE’s November 12 coverage of the IMF’s recommendations on Kenya’s stablecoin regulations examined concerns around foreign-denominated stablecoin reserves, domestic reserve requirements and licensing costs. The IMF has advocated greater flexibility around where foreign-denominated stablecoin reserves can be maintained, including arrangements involving foreign custodians.

That regulatory discussion has implications for the administration of unclaimed digital assets.

A Kenyan customer may hold stablecoins through a locally accessible cryptocurrency platform even when the issuer and its reserve arrangements are based abroad. The platform, token issuer and reserve custodian perform different functions, and UFAA would need a clear legal route for dealing with the customer’s unclaimed balance.

The underlying reserve assets should also not be confused with the stablecoins held by individual customers. A token holder’s claim is not automatically ownership of the issuer’s underlying reserves.

The IMF’s recommendations on licensing and reserve management are therefore relevant to the wider regulatory environment, although they do not themselves establish UFAA’s proposed custody powers.

Kenya’s crypto regulations are developing alongside the proposal

The Treasury’s plans come as Kenya implements its Virtual Asset Service Providers framework, which establishes regulatory oversight for businesses providing covered virtual asset services.

The framework involves the Central Bank of Kenya and the Capital Markets Authority, with licensing and supervisory responsibilities depending on the activities undertaken by the service providers.

TechTrendsKE’s November 10 reporting on the IMF’s recommendations also examined the proposed incorporation of the Financial Action Task Force’s Travel Rule into Kenya’s regulatory framework.

The rule requires covered virtual asset service providers to exchange identifying information about the originators and beneficiaries of qualifying transactions.

Such requirements can improve the traceability of cryptocurrency transfers between regulated platforms. They could also help establish the identities associated with accounts holding digital assets.

However, transaction identification and proof of abandonment are separate matters. An exchange may know its customer’s identity and transaction history without having evidence that the customer has relinquished ownership of an inactive balance.

The distinction becomes more complicated when assets move into self-hosted wallets.

A wallet can remain inactive for years because its owner is holding cryptocurrency as a long-term investment. Blockchain records may establish that no transactions have occurred, but inactivity alone cannot establish that the owner has abandoned the assets.

The legal definition of dormancy and the circumstances under which an asset becomes unclaimed will therefore be important in determining how the expanded framework operates.

Licensing requirements also affect the environment in which these obligations would be implemented. TechTrendsKE’s November 12 coverage reported the IMF’s concerns around the proposed Sh100 million minimum paid-up capital for cryptocurrency exchanges and Sh300 million for stablecoin issuers, alongside recommendations for requirements proportionate to the size and complexity of businesses.

The cost of operating a regulated platform could influence where providers establish their businesses and maintain customer relationships. That has implications for the recovery of assets held through foreign platforms, where Kenyan authorities may not have direct access to account records or custody arrangements.

Who controls cryptocurrency after it becomes unclaimed?

The practical administration of digital assets depends heavily on who controls the wallet and its private keys.

Cryptocurrency held on a custodial exchange is relatively easier to address because the platform maintains customer records and controls the infrastructure through which assets are held. If the account meets the applicable legal requirements for unclaimed property, the exchange could potentially transfer the assets to an authorised custodian.

Self-custody introduces a different problem. An individual holding Bitcoin or other digital currencies in a private wallet controls the credentials required to authorise transactions. There may be no exchange or financial institution capable of identifying inactivity or transferring the assets to UFAA.

Inheritance creates another complication. The loss of an account holder may leave beneficiaries unaware of cryptocurrency holdings or unable to access them because they do not possess the private keys or recovery credentials.

TechTrendsKE’s October 27 coverage of stablecoin payroll arrangements examined the operational responsibilities associated with digital asset custody. Discussions involving Benjamin O. Ajibola of StatePay and Manan Vora of Chainberg covered private-key management, backups, transfer approval controls, custodian due diligence and reconciliation of blockchain balances.

These are the kinds of capabilities that become relevant when a public authority assumes responsibility for digital assets.

The distinction between retaining cryptocurrency and converting it into cash also has financial consequences for claimants.

TechTrendsKE’s November 6 coverage of the Sh1.49 billion Equity Bank payroll fraud case provides a Kenyan example of judicial handling of identifiable digital assets. In the proceedings, the High Court ordered cryptocurrency associated with defendants on platforms including Binance to be converted into ordinary currency, with the proceeds held under an escrow arrangement.

That case involved the recovery of assets connected to alleged fraud, rather than the administration of unclaimed property. Nevertheless, it demonstrates a possible mechanism for preserving the monetary value of digital holdings through conversion and controlled custody.

The US provides another reference point. The supplied reporting notes that at least 20 states have enacted specific provisions governing dormant digital assets. Some require custodial platforms to liquidate qualifying cryptocurrency after three to five years of inactivity and transfer the cash proceeds to state treasuries. Others provide for the transfer of digital assets in their original form to approved custodians.

The choice between these approaches affects the value ultimately recovered by the rightful owner. If cryptocurrency is sold when it becomes unclaimed, a claimant may receive the cash proceeds rather than the original tokens, even if their market value subsequently increases.

Kenya’s framework will need to establish how such assets are valued, whether they are preserved in their original form and how claims will be settled.

UFAA faces a capacity challenge as its responsibilities expand

The proposed expansion comes as UFAA continues to manage a substantial portfolio of conventional unclaimed financial assets.

According to the authority’s survey cited in the supplied reporting, the estimated value of assets held increased from Sh241 billion in 2018 to Sh394 billion in 2025. Over the same period, the reported value of reunified assets rose from Sh199 million to Sh2.8 billion.

The reunification rate increased from 1.5% to 8%, remaining below the authority’s medium-term target of 20% and the reported global benchmark of 40%.

UFAA also reports Sh115.03 billion in remittances from holders of unclaimed assets into its Trust Fund Account, including foreign currency-denominated cash. Its holdings include 2.03 billion units of idle shares, 4,200 safe deposit boxes and 9.9 million-unit trusts.

The authority says it has received and paid claims amounting to Sh2.84 billion to 39,203 claimants.

These figures illustrate the scale of the existing administration task. Bringing digital assets into the framework would require additional systems for handling private keys, recording blockchain balances, establishing reliable valuations and protecting assets against unauthorised transfers.

The Treasury has proposed strengthening UFAA’s institutional capacity through additional human resources, decentralised operations and modern technology systems to support data management and automation. It also wants standardised reporting formats with minimum data requirements for asset holders.

Foreign currency-denominated assets would be reported and surrendered in Kenyan shilling terms using prevailing exchange rates under the proposed framework.

Cryptocurrency introduces a more complicated valuation exercise because prices can vary across trading platforms and liquidity conditions. Stablecoins can also trade away from their intended pegs, requiring rules that account for differences between their stated reference value and actual market prices.

The authority’s ability to reunite conventional assets with their owners remains an important measure of its administrative performance. Extending its responsibilities to cryptocurrency and stablecoins will require more than adding digital assets to a reporting template. It will require a system capable of preserving the assets, establishing legitimate claims and returning control to the people entitled to them.

Go to TECHTRENDSKE.co.ke for more tech and business news from the African continent and across the world.

Follow us on WhatsApp, Telegram, Twitter, and Facebook, or subscribe to our weekly newsletter to ensure you don’t miss out on any future updates. Send tips to [email protected]