TL; DR Breakdown
- The Kazakhstan senate approves proposed regulations to better watch over the financial and crypto sector within the country.
- The country is a significant crypto mining hub since China banned all crypto mining processes, necessitating these steps.
Kazakhstan made crucial steps recently by its Senate standing with new regulations to watch over its financial sector. Not only will this affect citizens, but all public figures and crypto services in the country. The Digital Development, Innovation, and Aerospace Ministry in Kazakhstan will be responsible for overlooking the introductions of new companies in the region.
Therefore, any crypto project that launches in the country has to go through Know Your Customer checks.
A point worth noting is these regulations will affect the Kazakhstan and AIFC (Astana International Financial Center) regions. AIFC is an independent territory governed under the Republic of Kazakhstan’s Constitutional Statute. The territory stands as a financial hub, attracting millions of crypto miners worldwide.
Increasing money-laundering worries in Kazakhstan
Kazakhstan officials expressed their worry about unregulated digital asset distribution connected to illicit activities. According to Olga Prepichina, the Senate Deputy, the new guidelines will be a way to cushion risks related to digital assets while ensuring transparent transacting using the currencies.
In her opinion, many illegal entities, including black-market participants, find digital assets convenient due to their anonymous nature. Furthermore, the decentralization of crypto platforms makes it hard to track down finances. These factors prompted the need for regulations that would ensure the progression of the booming industry in a safe environment.
An additional proposal to the issue is that the Kazakhstan Financial Monitoring Agency garners more authority. In that case, the body will have unlimited access to legal parties within the country. Nonetheless, the Kazakhstan president is yet to approve the proposed bill.
Regulating crypto mining
Recent reports from the Kazakhstan Data Center Industry and Blockchain Association revealed the country’s opportunity to gather over $1.5 billion from crypto mining in the next five years. The blockchain association comprises of top digital asset mining companies in the country today. It stands as an excellent opportunity that Kazakhstan can utilize to improve its economy as private crypto mining companies register approximately $230 million annually.
The country has taken a position among the top three countries leading in crypto mining globally. It owes this progress to China’s stringent regulations and bans on crypto activity within the communist state.
Notwithstanding, along with this success came power issues, pushing government entities to consider more laws to control energy consumption. It also puts into account the costs incurred by ‘gray’ miners that illegally perform mining processes.
The president of the blockchain association Alan Dordizhiev pointed out the necessity of finding the proper channels to deal with the situation. After all, the wrong regulations would cripple legal miners in the country. Nonetheless, he pointed out that the matter is urgent as ‘gray’ miners consume approximately 300 megawatts yearly.
Lastly, the association mentioned its willingness to help the Kazakhstan government deal with the miners’ issue. Its end goal is to ensure a healthy power supply countrywide, avoid power limitations to ‘white’ miners, increase the country’s revenue from crypto mining, and develop the mining industry.