Kenya VASP insurance is regulation 88, and it contains exactly one number
People look in the wrong place
Ask most people where the insurance requirement for a Kenyan virtual asset service provider sits and they will point at the Fifth Schedule to the Virtual Asset Service Providers Regulations, Legal Notice No. 134 of 2026. It is not there.
The Fifth Schedule is expressed to be made under regulations 6(2)(h), 85(2)(a), 85(3) and 85(12), and it is titled Capital and Liquidity Requirements. It has two columns and only two: minimum paid-up capital, and minimum liquid capital. There is no fee column and there is no insurance column. Applicants who build a cost model from the Fifth Schedule alone therefore produce a model with no insurance line in it, and then discover the obligation late.
Fees are elsewhere too, in the First Schedule. Insurance is regulation 88.
What regulation 88 actually requires
Regulation 88 is short, and it is worth reading as six connected sub-rules rather than as a single duty:
- 88(1) requires cover commensurate with the licensee's risk and scale. It prescribes no sum.
- 88(2) allows an approved alternative arrangement where cover is not obtainable.
- 88(3) requires a Kenya-licensed insurer, or a foreign insurer approved in consultation with the Insurance Regulatory Authority.
- 88(4) permits group policies only if the licensee is named as an insured with a stated level of cover.
- 88(5) sets the perils the cover must reach: cyber, theft, loss of keys, and operational failure.
- 88(6) is the only hard figure anywhere in the regulation: professional indemnity cover of at least KSh 1,000,000 for an investment adviser.
All six of those are instrument text from the gazetted notice, not reporting of it.
The one number, and why it lands on the smallest licensee
There is a quiet symmetry in regulation 88(6). The investment adviser category is the only one in the Fifth Schedule with NIL minimum paid-up capital and NIL minimum liquid capital. So for an adviser, the KSh 1,000,000 professional indemnity floor under regulation 88(6) is effectively the only prescribed balance-sheet number in the entire regime. Everything else about an adviser's financial standing is judged, not prescribed.
That is also a place where memory misleads. The National Treasury's March 2026 draft put investment adviser paid-up capital at KSh 2.5 million. The gazetted notice puts it at NIL. The draft is still downloadable and is still being quoted, so if a number you are working from came from a document rather than from Legal Notice No. 134, check which document.
The group policy trap
Regulation 88(4) is where foreign-parented applicants most often have a problem they do not know about. A global crime or specie policy taken out at parent level, under which the Kenyan subsidiary is covered as an unnamed group member, does not satisfy 88(4). The licensee must be named as an insured and the policy must state a level of cover attributable to it. Getting an endorsement issued to that effect takes weeks with most carriers, and it is not a document you can produce in the week you file.
Regulation 88(5) is the second common gap: cyber, theft, loss of keys and operational failure is a wider peril set than a standard commercial crime policy covers. Loss of keys in particular is the one brokers most often come back on.
What commensurate means is not yet settled
Regulation 88(1) gives no sum, no formula and no multiple of capital or of assets under custody. Neither the Central Bank of Kenya nor the Capital Markets Authority has published guidance on what level of cover it will treat as commensurate, and the application window under Legal Notice No. 134 has not yet opened. Anyone quoting you a specific required sum insured for a Kenyan wallet provider or exchange is quoting a view, not the regulation. Treat this as an open question and document your own reasoning: the risk assessment behind the figure you choose is the thing a reviewer can actually test.
What to do before you file
- Take insurance out of the Fifth Schedule workstream and put it in its own, starting from regulation 88.
- Ask your broker early whether your intended insurer is licensed in Kenya, and if not, plan for the regulation 88(3) approval route in consultation with the IRA.
- If you rely on a group policy, get the named-insured endorsement with a stated limit under regulation 88(4) in writing.
- Check the policy wording against all four perils in regulation 88(5), especially loss of keys.
- Write down how you sized the cover against your own risk assessment, so the commensurate judgement under 88(1) is evidenced rather than asserted.
The checklist behind this article
The Kenya VASP checklist is a readiness document for Legal Notice No. 134: every item cited to the regulation or schedule number behind it, every figure marked according to whether it is gazette text or reporting of it, and genuinely open points, like what regulation 88(1) treats as commensurate, marked as open instead of guessed at. USD 79, with the updated edition free as the position develops.
For a single-category applicant the checklist should be all you need. If you are applying across categories supervised by both the CBK and the CMA, or relying on a parent-level insurance programme, the 48-hour gap check is there for the cases that are not straightforward.