Tag: Kazakhstan

Kazakhstan plans to reduce tax fraud and unlawful business operations

by Blockchain News

Kazakhstan, which is one of the main centres for Bitcoin (BTC) mining in the world, has revealed intentions to establish new crypto legislation in order to cut down on tax fraud and illegal business activities.

On February 6, Kazakh President Kassym-Jomart Tokayev signed a new legislation that renewed the nation’s stance against the unlawful issuance of crypto assets and mining activities. This law also reinstated the nation’s stance against illegal mining operations. The first of the two separate pieces of law mandates that issuers of secured digital assets get authorisation from the government.

In addition to this, such issuers will be monitored in accordance with the legislation that is now in effect in the country, which is titled “On Combating the Legalization (Laundering) of Proceeds from Crime and the Financing of Terrorism.” The new regulation will go into effect on the first of April in 2023.

The second piece of proposed law targets insecure digital assets, which are often acquired via the process of crypto mining. In Kazakhstan, cryptocurrency miners will soon be required to sell at least 75% of their earnings via licensed cryptocurrency exchanges. This measure is being taken to limit the likelihood of tax avoidance. This regulation, which will take effect on January 1, 2024, will remain in force until January 1, 2025, and its primary objective is to gather “information on the revenue of digital miners and digital mining pools for tax reasons.”

Every cryptocurrency mining license in Kazakhstan is only valid for a period of three years and varies in price according on whether or not the miner owns the mining facilities. In Kazakhstan, all mining licenses are provided on a first-come, first-served basis.

Alongside the implementation of the aforementioned regulations, Kazakhstan initiated the “digital tenge” pilot project for its central bank’s digital currency (CBDC) initiative.

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Kazakhstan Seeks to Improve Cryptocurrency Trading Framework

by Blockchain News

Kazakhstan, which is home to one of the most significant Bitcoin (BTC) mining operations in the world, has released a consultation paper in an effort to gauge the level of interest shown by the general public in proposed amendments that would improve the regulatory framework for cryptocurrency trading.

The Astana Financial Services Authority (AFSA), a Kazakh regulator, developed the guidelines that are outlined in the policy document that was made public on January 27. The Astana International Financial Centre has a regulatory framework in place for its Digital Asset Trading Facility (DATF) that goes back to 2018, and the AFSA pointed out that the changes aim to make some upgrades to the framework.

The research conducted by AFSA revealed “contradictions, ineffective rules, and ambiguous definitions within the regime,” which were among the issues that were brought to light as a result of the continued monitoring of cryptocurrency exchanges. It suggested implementing risk reduction strategies across several fronts, including as governance, illegal behaviour, the safety of customers’ assets, and settlement.

Regarding the reorganisation of the DATF framework, the report suggested three different options: maintaining the framework in its current form, building an independent DATF framework, and treating crypto exchanges as a multilateral trading facility.

The AFSA is of the opinion that the policy proposals will result in a number of changes, one of which will be the reduction of risks associated with cryptographic operations and the sector as a whole. In addition, the upgrades will address aspects of the present framework that are contradictory and imprecise, and they will do so. The end result, as is anticipated by AFSA, will be the establishment of a favourable framework for cryptocurrency exchanges while simultaneously promoting innovation.

The policy paper indicates that the proposed measures will have a favourable effect on the cryptocurrency trading industry, stating that “this will collectively help to create more of a clear, convenient, efficient, detailed and balanced AIFC DATF framework with high standards for consumer protection, without hindering development of crypto exchanges.”

In a concluding note, the paper disclosed that the review of the DATF framework is in line with the initiative known as “AFSA’s Strategy for 2022,” which identifies the creation of a “Digital Assets framework: Crypto exchanges, STO and DASP” as one of three primary goals for the development of key regulations.

On the other hand, Kazakhstan’s central bank recommended launching an in-house central bank digital currency (CBDC) in 2023, with a phased expansion of functionality and introduction into commercial operation until the end of 2025. This recommendation is at the opposite end of the spectrum from the previous one.

Binance CEO Changpeng “CZ” Zhao made the announcement in October 2022 that the CBDC of Kazakhstan will be merged with BNB Chain, a blockchain that was constructed by the cryptocurrency exchange.

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Binance Signs New MOU With Kazakhstan as it Looks to Fight Crimes

by Blockchain News

Binance exchange, arguably the largest trading platform by trading volume has signed its second Memorandum of Understanding (MoU) with Kazakhstan.

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As announced by the company, the latest partnership was inked with the republic’s Financial Monitoring Agency to advance the reach of its global enforcement training targeted at fighting both financial crimes and cybercrimes.

 

Binance officially launched the Global Law Enforcement Training program last week in an attempt to complement related trading of watchdogs around the world as it has been doing for the past year. Thus far, Binance has held its training for this program in Italy, France, Canada, Germany, Israel, Norway, and the United Kingdom.

 

The scope of the Kazakhstani partnership will be centered on identifying and blocking cryptocurrencies that were obtained illegally as proceeds of criminal activities which can also be used to finance terrorism.

 

Binance has played a more frontline position in the broader scheme of things as it concerns keeping the health and sanity of the entire digital currency ecosystem from bad actors. In Binance’s role as a key watchdog keeping oversight of bad actors, it has helped Axie Infinity’s Ronin Bridge recover as much as $5.8 million that the Lazarus Group attempted to launder through it earlier this year.

 

The MoU with the Kazakhstani Financial Monitoring Agency trails the similar one that was signed by Binance CEO, Changpeng Zhao and the country’s President, Kassym-Jomart Tokayev back in May of this year. 


The broad relationship Binance is building with regulators around the world is benefitting the exchange as it has regained the trust of many who once labeled it unfit to operate within their shores. From France to Italy, Spain, and even Kazakhstan, the trading behemoth has landed approvals to operate its business in these regions and it is looking to explore more partnerships in a bid to expand its broader regulatory reach.

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Kazakhstan Gets Closer to Legalizing Digital Currencies: Report

by Blockchain News

Central Asian country Kazakhstan is closer to legalizing digital currencies as President Kassym-Jomart Tokayev has doubled down on his interest in making the country a leader in digital technologies.

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As reported by local media, Informburo, the government is building its interest in creating a platform that can aid the conversion of cryptocurrencies to fiat in the Astana International Financial Centre (AIFC). This projected capability is billed to extend the country’s grip in the crypto world as it also intends to intensify its efforts in the crypto mining ecosystem.

“Currency conversion is already being carried out at the site of the Astana International Financial Center under a special pilot project. For this, quite innovative changes were made to national legislation and the regulatory environment. And we are ready to go further. If this financial instrument shows its further demand and security, then it will certainly receive full legal recognition,” Kassym-Jomart Tokayev said at the Digital Bridge 2022 international technology forum.

The projection of Kazakhstan to deepen its foothold in the crypto world started years ago, and the country projected it would attract close to $1 billion in investments, as revealed back in 2020. Over the past couple of years, Kazakhstan has shown it is more welcoming to crypto service providers when compared to some of its closest neighbours. 

President Tokayev signed a Memorandum of Understanding (MoU) with Binance exchange when he and the trading platform’s CEO, Changpeng Zhao, met back in May this year. The commitment of the MoU is many. However, a major focus was to help develop the digital economy of Kazakhstan.

Beyond the direct involvement with privately issued cryptocurrencies and their broader ecosystem, Kazakhstan is also heavily invested in its Central Bank Digital Currency (CBDC) project. The nation launched the public consultation on the e-currency project in May.

With licenses and approvals to operate being granted to key industry stakeholders like Binance, Kazakhstan is inching towards becoming a major crypto hub in the next couple of years.

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Binance Snaps Up the In-principle Approval to Trade in Kazakhstan

by Blockchain News

Binance has received the authorization to trade in Kazakhstan after snapping up the In-Principle Approval from the Astana Financial Services Authority (AFSA). 

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The announcement comes off as yet a huge milestone for the exchange, which is tagged as the biggest in the world by trading volume. The approval will enable it to operate a Digital Asset Trading Facility and Provide Custody in the Astana International Financial Centre (AIFC).

The approval comes off as the first such granted to a Binance entity in the region.

“Kazakhstan has shown itself to be a pioneer in Central Asia crypto adoption and regulation,” said Changpeng Zhao (CZ), founder and CEO of Binance. “This further signifies Binance’s commitment to being a compliance-first exchange and providing  products and services in a safe and well-regulated environment across the globe.”  

Binance is determined to turn the tables after being pressed hard by regulators for not following the right channels prior to plying its trades on their shores. The latest regulator to spank Binance was the De Nederlandsche Bank (DNB), the country’s biggest monetary authority, while a Filipino think tank also called on the government to ban the exchange from operating in the country.

Binance has recently made many advances with the licenses it has secured. From Spain to Bahrain, to France and Italy, the trading platform expanded its footprint across Europe and Asia.

The push in Kazakhstan was trailed by the exchange’s CEO signing a Memorandum of Understanding (MoU) with the Kazakhstani government as it looks to help pioneer the nation’s digital transformation agenda through blockchain technology. 

The positive outlook in Kazakhstan is contagious, and the country said it would continue to make its shores a haven for investors looking for a home.

“Large investors seeking new markets need clear-cut and well-managed rules and high regulatory practice standards. When a regulator meets these requirements, it creates collaboration based on trust and an ecosystem where players can work safely and efficiently. We believe that Binance’s work will further develop this vibrant ecosystem of digital assets industry locally and regionally,” said Nurkhat Kushimov, Chief Executive Officer of AFSA.

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Kazakhstan Is Not Late to Embrace Crypto: National Bank Chairman

by Blockchain News

The National Bank of Kazakhstan is warming up to cryptocurrencies, but not at the same pace as some governments that have legalized the trading of cryptocurrencies on their lands.

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At a recent press conference, the National Bank Chairman, Galymzhan Pirmatov was asked if the country came late to the crypto party.

Pirmatov responded that the country is not in any way late to the crypto space, noting that it has taken out time to carefully observe the space over time. “I do not think that the National Bank is late. We, like many central banks and financial regulators in the world, are carefully observing and studying this issue,” Pirmatov said adding that the bank is somewhat holistic in its approach to the ecosystem with considerations for miners, Decentralized Finance (DeFi), and all innovations associated with the industry.

“We are talking about decentralized finance, where we are attracted by the possibility of innovation. That is, we do not keep the issue of miners or about some separate part. We are interested in the opportunities for innovation that these new technologies give us.”

Based on this, Pirmatov said the bank is going to continue making consultations in order not to introduce a policy that will affect macroeconomic stability and “the interests of consumers of financial services.”

Kazakhstan is notably putting its money where its mouth is, and per the consultation move, it recently inked a partnership with Binance exchange in the latest visit of Changpeng Zhao to the country.

The partnership will see the trading platform, recognized as the biggest in terms of trading volume, advise the government in terms of the policy as it relates to its push to bring regulations into the growing crypto ecosystem.

Pirmatov affirmed that the country will no longer ignore the crypto market and will be open to the best of the innovation the space has to offer.

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Kazakhstan Energy Ministry Cracks Down on Illegal PoW Mining

by Blockchain News

A short while ago, Kazakhstan was flaunted as a major hub for Bitcoin (BTC) and Proof-of-Work (PoW) mining, but today, the country is fast becoming an intolerant zone for cryptocurrency mining activities.

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According to a press release shared by the Committee for Nuclear and Energy Supervision and Control of the Ministry of Energy of the Republic of Kazakhstan, several mining farms have been targeted by the ministry as well as an organized group of law enforcement agencies.

As detailed, a total of 13 mining farms were raided, all collectively consuming a total of 202 MW of electricity. According to the authorities, the collective power consumption tally was cumulative power from mining farms in various regions, including Karaganda, Pavlodar, Turkestan, Akmola, and Kostanay region, amongst others.

Kazakhstan was the immediate and closest option available to Bitcoin miners after the Chinese government banned everything linked to digital assets transactions last year. While Kazakhstan quickly rose in ranking as the second country with the highest amount of BTC Hashrate, the miners who migrated down to the nation soon became targets. The government has employed several tactics to stop their operations, including power cuts and now hunt down.

With the government’s stance in recent times, it is evident that Kazakhstan is not the dream home that many miners had envisaged in the past, and the current crackdown may stir another China-like exodus from the country.

Through the recent hunt down efforts, the energy ministry has confirmed plans to continue these similar raids as it seeks to rid its shores of identified and non-identified mining farms.

“The work of the mobile group to identify and disconnect mining farms from the electrical networks will continue, and the authorized bodies are also carrying out operational and investigative measures on the identified mining farms,” the press release reads.

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Kazakhstan proposes power price hikes and taxes targeting crypto miners

by Cointelegraph

The Kazakh government is considering a three-pronged proposal designed to make crypto miners pay much more for operating in the country, which could make Kazakhstan less attractive to the industry.

On Feb. 4, Kazakhstan’s First Vice Minister of Finance, Marat Sultangaziyev, proposed a price increase from $0.0023 per Kwh to $0.01 (around a 335% increase) specifically for crypto miners. He also proposed a tax on each individual graphics card (GPU) and each piece of equipment needed for crypto mining. He likened the tax-per-video card to the way casinos are taxed for each table they run, whether or not the table is active.

The third part of his proposal was to remove mining hardware from an exemption on value-added tax (VAT).

Mining Bitcoin requires the use of specific hardware to complete the mathematical calculations needed to create new blocks on the blockchain. Larger mining operations house upwards of 10,000 mining rigs including ASICs (application-specific integrated circuits), GPUs, racks, cooling units, and associated facilities.

Up until political unrest caused the government to restrict internet access last month, Kazakhstan has become one of the most popular destinations for crypto miners following the China ban on mining last summer. Around Jan. 5, the Bitcoin network’s hash rate plummeted by 13.4% in a day from about 205 exahashes per second (EH/s) to 177 EH/s due to the brief shut down in Kazakhstan.

BIT Mining, a large Bitcoin mining operation that moved from China to Kazakhstan last July, stated in January that the political unrest would not force it to move its operations elsewhere. However, that was before the power and tax increases were proposed.

Cheap electricity costs and proximity to China have attracted miners fleeing from Chinese authorities amid crackdowns in the country. This led Kazakhstan to become the second-largest producer of hash power for Bitcoin behind the United States, producing about 18% of the network’s hashrate as of August 2021 according to Cambridge University. It may become less desirable for new and existing miners to call it their base of operations if the crippling taxation proposals come into force.

It should also be noted that Kazakhstan has struggled with power supply issues since late last year, around the same time when crypto miners rushed in from China. The country saw an 8% increase in domestic electricity consumption through 2021, leading the government to consider building a nuclear power plant to ease the stress on the power grid and keep energy costs low.

Related: All eyes on Asia: Crypto’s new chapter post-China

Inexpensive electricity seems to be the single most important factor attracting miners. Cointelegraph reported on Jan. 27 that the U.S. cannot provide the cheapest electricity and therefore “cannot hold on to the mining champion title for long.” Removing that advantage from miners in Kazakhstan could spell doom for the country’s ambitions to extract $1.5 billion from miners within the next 5 years.