The International Olympic Committee froze financial support to Kenya on Thursday (March 9) after the country's troubled Olympic Committee failed to make changes to its constitution - a decision that could lead to a ban.
The IOC said it would discuss the matter at its executive board meeting in Pyeongchang next week to decide on any further action.
The IOC wants a series of new regulations addressing issues of good governance within the country' Olympic committee (NOCK) which has been dealing with problems regarding doping, mismanagement and political pressure for some time.
The governing body has been in turmoil since the Olympics in Brazil last August where large sums of money meant to cover the expenses of Kenya's team at the Rio Olympics were misappropriated by officials.
The monies had been earmarked to buy air tickets for team members, but was instead taken by unidentified officials.
National Olympic Committee of Kenya (NOCK) also diverted money and kit from U.S. sports equipment manufacturer Nike worth millions of shillings.
National Olympic committees divide up about $1.0 bn in IOC revenues every four years, their share from the marketing revenues of the Olympics while the IOC also supports thousands of athletes, coaches and staff through its Olympic solidarity fund.
Kenya last month accepted a local high court decision overruling last year's government order to disband the Olympic committee (NOCK), after accusations it had poorly handled arrangements for the 2016 Rio Games.
Despite problems in the build up to Rio, the East African nation enjoyed its most successful Olympics, winning six gold medals, six silvers and one bronze, all in track and field.
A possible ban would mean Kenya would not be allowed to send a team to the Olympic Games with its athletes forced to compete under as independent athletes under the Olympic flag.
The country would also not take part in any IOC-sanctioned event or meeting and would also not benefit from IOC funding of any form, including athletes' support and training.
The IOC suspended Kuwait in October 2015, accusing the government of interference in its national Olympic committee and its athletes competed as independents in Rio.