Key takeaways
- The National Bank of Kazakhstan is launching a new licensing regime for crypto exchanges, requiring formal authorization for crypto-to-fiat service providers to bring structure and transparency to the market.
- The move addresses long-standing legal ambiguities and investor protection issues, which have contributed to about $15 billion outflow of crypto assets.
- Once a major Bitcoin mining hub, Kazakhstan’s global share dropped from over 27% in 2021 to 4% in 2023, following regulatory tightening and energy grid strain caused by unregulated growth.
- With the new regulatory framework and projected growth in crypto revenues and users, Kazakhstan seeks to reposition itself as a key crypto hub in Central Asia, balancing innovation with regulatory oversight.
Kazakhstan is introducing a new licensing regime for digital asset exchanges, aiming to bring transparency and structure to the country’s cryptocurrency sector. The National Bank of Kazakhstan will lead the initiative, requiring crypto-to-fiat service providers to obtain formal authorization.
Framework of the new regulatory system
Yerlan Ashykbekov, head of the central bank’s payment systems department, announced the move during a recent media briefing. He stated that crypto exchange service providers will now be classified as a new category of market participants and must operate under licenses issued by the central bank.
Licensed entities will be permitted to conduct crypto-to-fiat transactions, with the central bank determining which digital assets can be traded. The scope of supervision will also extend to platforms issuing or circulating digital financial assets, including stablecoins.
Crypto exchanges operating within the Astana International Financial Centre (AIFC) will continue to function under a separate regulatory regime. However, officials plan to integrate AIFC-based platforms with the broader licensed ecosystem under the new framework.
Shoring Up a Leaky Crypto Economy
The regulatory overhaul will respond to long-standing concerns about the lack of a supportive legal framework in Kazakhstan’s crypto environment. Experts have warned that extremely rigid regulations have created legal grey areas for users and led to capital flight.
Deputy Chairman of the country’s National Bank, Berik Sholpankulov, recently revealed that approximately $15 billion worth of crypto assets have left the country. He attributed this “leak” to inadequate legal protections for investors. “Administrative and legal regulation is not sufficiently structured so that citizens could invest safely,” Sholpankulov said during a press conference.
Kazakhstan has seen a significant decline in its role within the global crypto market in recent years. In 2021, it accounted for more than 27% of global Bitcoin mining, largely driven by an influx of miners from China attracted by cheap electricity and minimal regulation. However, this rapid growth put pressure on the national power grid and revealed major gaps in oversight. By 2023, tighter regulations and a crackdown on illegal operations had slashed Kazakhstan’s share to just 4%.
Kazakhstan is positioning itself as a leading crypto hub in Central Asia with a new regulatory framework aimed at revitalizing its digital asset ecosystem. According to Statista, the country’s cryptocurrency revenues could reach $101.4 million by 2025, with over 923,000 users expected in 2025. The government is actively pushing for this growth by striking a balance between innovation and regulation, an approach that could make Kazakhstan a regional benchmark for crypto governance.
