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Kazakhstan works with Binance to boost its crypto industry

Kazakh
TL;DR Breakdown
  • Kazakhstan crypto mining tax guidelines receive preliminary approval in the first sitting.
  • Binance is set to aid Kazakhstan in regulating digital assets, as the country seeks to grow its cryptocurrency sector beyond BTC mining.

Kazakhstan, one of the world’s major leaders in cryptocurrency mining and a country that has recently engaged in hostile actions against the sector, is moving toward a comprehensive fiscal framework for miners. On the other hand, Binance, the world’s major cryptocurrency exchange, will assist Kazakhstan in developing digital assets legislation as it aims to develop its crypto sector beyond bitcoin (BTC) mining.

Kazakhstan passes crypto mining tax guidelines in the first reading

On 25 May 2022, the lower chamber of the Kazakh Parliament, the Mejlis, approved in the first reading amendments to the national tax code that impose a tax burden on crypto mining. These proposals establish graded tax rates depending on how much electricity mining enterprises use.

For instance, the most cost-effective energy grade, 5 to 10 tenges per kilowatt-hour (tk), would come with an additional charge of 10 tenges per kilowatt-hour ($0,024) for Kwh. According to the Kazakhstan government, the mining tax would be 7 tenges ($0,017) per Kwh for 10–15 tenges ($0,024–0,036) per Kwh and 3 tenges ($0,0072) per Kwh for 20–25 tenges ($0,048–$0,060).

Over the last few months, changes have been released that go beyond the original initiative to raise the cost of power from $0.0023 per Kwh to $0.01 for crypto miners, which Kazakhstan’s First Vice Minister of Finance proposed to Marat Sultangaziyev in February.

According to the chamber, the changes were intended to offer a jolt of fresh air for utilizing alternative energy sources. In the case of green energy, the tax would be only 10 tenges ($0,0024) without considering the electricity price.

The government is moving to restrict energy usage in the country. According to Kazakhstan government officials, the measures are intended to balance the load and de-stimulate private sources of energy consumption.

On April 29, the country’s Minister of Digital Development ordered digital mining firms to provide data on electricity usage and “technical characteristics” for connection to the electricity grid 30 days before beginning operations. Previously, in March, 106 crypto mining operations were shut down after being investigated by the Financial Monitoring Agency, which seized over 67,000 pieces of equipment.

The government of Kazakhstan could make it simpler to pass new crypto laws. According to public policy experts in Kazakhstan, legislation regarding technology regulation, cryptocurrency, pharmaceutical pricing, tax increases, and China competition will have varying chances on cryptocurrency legislation and crypto mining regulations, and all crypto entities could face changes.

The growth of the digital assets industry will necessitate defining regulation for this new asset class, especially in terms of stablecoins, cryptocurrency products, institutional ownership of cryptocurrencies, and the prospect of a central bank digital currency (CBDC).

Binance to advise Kazakhstan on crypto strategy

As the crypto industry grows in Kazakhstan, Binance, the world’s largest cryptocurrency exchange, will assist with developing digital assets regulation as the country looks to expand its crypto sector beyond bitcoin (BTC) mining.

According to a post on its official blog, Binance will also attempt to integrate financial infrastructure into the cryptocurrency market and help with the country’s blockchain strategy. The company will establish a temporal presence in Astana, the capital of Kazakhstan. According to Binance’s official announcement, the exchange will collaborate with the country’s digital ministry to transform the IT park Astana Hub into a regional blockchain center.

Kazakhstan is home to one of the world’s largest bitcoin mining operations, but it has struggled to deal with electricity shortages in its mining sector. The government has launched initiatives to boost its crypto and blockchain economy beyond mining, including attracting new companies to Astana’s financial center, the Astana International Financial Centre (AIFC).

The central bank of Kazakhstan also revealed that a change to legislation allowing banks to provide services to crypto exchanges set up in the AIFC was implemented in March. Binance’s advisory role is a turnaround for the company, which incurred the displeasure of regulators around the world last year. Since its regulation blackout, the firm has bolstered its compliance staff and efforts to allay their fears.

On Wednesday, Binance CEO and founder Changpeng “CZ” Zhao met Kazakh President Kassym-Jomart Tokayev, as well as Minister of Digital Development, Innovation, and Aerospace Industry Bagdat Musin and the president’s First Deputy Chief of Staff Timur Suleimenov, according to an update.

Together with CZ, we considered the Binance roadmap in Kazakhstan. According to the blog post, we also discussed the potential of creating a blockchain-oriented VC-fund and academy to help local talents from Astana Hub go global.

President Kassym-Jomart Tokayev

stanFollowing the Terraform labs crash, financial experts forecast that crypto legislation will happen a lot quicker. According to them, responsible regulation will be essential for regulators, and they should strive for positive working relationships with blockchain developers. They do not believe that increased regulation restricts the amount of innovation in the crypto industry.

Florence Muchai

Florence Muchai

Florence is a crypto enthusiast and writer who loves to travel. As a digital nomad, she explores the transformative power of blockchain technology. Her writing reflects the limitless possibilities for humanity to connect and grow.

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