Kazakhstan’s Steps Towards Regulating Digital Assets
Kazakhstan is taking significant steps towards establishing a regulated and sustainable framework for digital assets, as indicated by Prime Minister Olzhas Bektenov‘s announcement on April 25. This initiative comes as a response to inquiries from the Mazhilis, the lower house of the Kazakh Parliament, reported by Asana Times.
Role of Proposed Crypto Banks
During his address, Bektenov highlighted that the proposed crypto banks would serve crucial functions such as facilitating digital asset exchanges, providing secure storage solutions, and processing transactions.
The country’s strategy to enhance its crypto banking sector will leverage existing infrastructure provided by platforms, custodians, brokers, and dealers already operational under the auspices of the Astana International Financial Centre (AIFC). This center acts as a regulatory hub for financial innovation in Kazakhstan, where proposed legislative changes aim to liberalize digital asset circulation and increase opportunities for crypto-related ventures.
Compliance and Technological Advancements
Beyond traditional banking services, the introduction of crypto banks is also seen as pivotal for reinforcing anti-money laundering practices and ensuring compliance with regulations aimed at preventing terrorism financing. Furthermore, these banks are expected to drive domestic advancements in IT and blockchain technologies.
Bektenov expressed confidence that establishing these institutions will enhance Kazakhstan’s attractiveness to global investors and illustrate the nation’s commitment to integrating decentralized finance within an official regulatory environment.
Impact on Employment and Professionals
The emergence of such institutions will create demand for new specialists, particularly in compliance, blockchain analytics, and anti-money laundering, and will also ensure the growth of liquidity of fiat and digital assets within the AIFC. — Olzhas Bektenov
Regulatory Challenges and Developments
A notable development occurred last month when a lawmaker urged the government to establish a legal framework for a crypto bank that could function as both an exchange and custody platform. However, Kazakhstan’s regulatory stance has tightened significantly, as evidenced by its decision to block access to Coinbase due to alleged infringements of its digital assets legislation. While some crypto exchanges such as Binance, Bybit, and Upbit have been granted operational licenses, platforms like Coinbase and Kraken have faced stiff restrictions, along with a broader clampdown on foreign brokers and exchanges.
Kazakhstan’s financial authorities have implemented a stringent approach to cryptocurrency management, resulting in the freezing of $1.2 million worth of crypto assets and the dismantling of 19 illegal over-the-counter platforms. Additionally, an assault on illicit mining operations has led to the closure of nine locations and the confiscation of approximately 4,000 mining rigs.
Growing Interest in Digital Assets
Despite these challenges, a recent study revealed that the percentage of Kazakhstani citizens owning cryptocurrencies has increased significantly over the past two years, with 2024 witnessing a rise in tax revenue from the expanding digital asset sector.
