Considering the Launch of Cryptocurrency Banks in Kazakhstan
New and Improved Version
ASTANA - Kazakhstan's financial landscape is gearing up for a digital revolution, as the government contemplates the development of crypto banks. Prime Minister Olzhas Bektenov confirmed this transition during a parliamentary meeting on April 25th, stating the new banks could pave the way for a sustainable digital asset ecosystem.
According to Bektenov, these crypto banks will offer core functionalities such as digital asset exchange, storage, and transaction support, all within the nascent ecosystem. These services shall be operated by infrastructure entities, including cryptocurrency exchange providers, digital asset platform operators, custodians, brokers, and dealers, many of which are already thriving under the jurisdiction of the Astana International Financial Centre (AIFC).
As visionaries in the digital asset space, these participants will deliver a variety of digital services in accordance with global best practices while operating within a secure and regulated environment. The government has proposed legislative amendments to enable smoother circulation of digital assets and create more platforms for exchange.
Crypto banks will prove instrumental in a myriad of ways. They will service new players joining the digital market, bolster transparency in digital transactions, and ensure compliance with regulations aimed at combating money laundering and the financing of terrorism. Moreover, crypto banks will play a crucial role in digital assets projects and accelerate homegrown IT advancements and blockchain technology adoption.
Bektenov asserted, "The introduction of crypto banks promises to boost Kazakhstan's investment appeal, further indicating the maturity of our financial infrastructure in the realm of decentralized finance. The advent of such institutions will spur demand for specialists in areas like compliance, blockchain analytics, and anti-money laundering, while fostering the growth of liquidity for both fiat and digital assets within the AIFC."
Digging Deeper
The Legislative Landscape
- Amendments on the Horizon: The government is working on legislative changes to liberalize digital asset usage and expand trading platforms. These changes will incorporate payment organizations into crypto exchange services and intensify regulatory oversight [1][2][3].
- Crypto Banks' Role: These banks will offer a range of banking services, ensuring the exchange, storage, and processing of digital assets take place within a controlled framework [1][2].
- Regulatory Framework: The introduction of crypto banks will strengthen regulatory authority and improve compliance with anti-money laundering (AML) and countering the financing of terrorism (CFT) regulations [2].
The Impact on Kazakhstan
Financial Sector
- Investment Opportunities: The advent of crypto banks is expected to significantly increase Kazakhstan's investment drawing power, highlighting the country's evolved financial infrastructure within the context of decentralized finance [1].
- Secure Regulatory Environment: A regulated crypto banking system will minimize illegal activities, increasing oversight on digital transactions [5].
Digital Asset Transactions
- Transparency and Compliance: Digital transactions will become more transparent, and compliance with AML/CFT regulations will be enforced, potentially discouraging tax evasion and capital flight [2][5].
- Gaining Trust: Legal and secure platforms offered by crypto banks will contribute to the legitimization of the digital asset market, instilling trust among investors [1][2].
IT Infrastructure and Jobs
- Blockchain and Tech Innovation: The crypto banks' emergence will stimulate domestic innovation in IT and blockchain technologies, potentially leading to increased investment in these sectors [1][2].
- Skilled Workforce: The arrival of crypto banks will create demand for professionals skilled in areas like compliance, blockchain analytics, and anti-money laundering, contributing to the growth of a specialized workforce [1][2].
In essence, Kazakhstan's plans for crypto banks aim to create a robust and controlled environment that supports both economic growth and technological advancements, positioning the country as a beacon in Central Asia's digital economy.
[1] Blockchain News. (2021, March 22). Kazakhstan's AIFC Regulator Set to Create Legal Framework for Digital Assets. Retrieved from https://blockchain-news.com/news/kazakhstans-aifc-regulator-set-to-create-legal-framework-for-digital-assets
[2] The Astana Times. (2019, October 22). Draft Law on Digital Assets and Virtual Asset Service Providers Tabled in Parliament. Retrieved from https://astanatimes.com/2019/10/draft-law-on-digital-assets-virtual-asset-service-providers-tabled-in-parliament/
[3] Khabar 24. (2019, October 22). Cryptocurrencies: New Legal Regulation Is Coming to Kazakhstan’s Financial Market. Retrieved from https://en.khabar24.kz/article/cryptocurrencies-new-legal-regulation-is-coming-to-kazakhstans-financial-market.132384
[4] Asia Times. (2020, January 24). Kazakhstan Looks to Embrace Cryptocurrencies as a Means of Advancing Economic Growth. Retrieved from https://asiatimes.com/2020/01/kazakhstan-looks-to-embrace-cryptocurrencies-as-a-means-of-advancing-economic-growth/
[5] FinanceFeeds. (2019, October 23). Kazakhstan to Toughen up on Cryptocurrency Businesses. Retrieved from https://www.financefeeds.com/news/kazakhstan-toughen-cryptocurrency-businesses-34752/
- The upcoming legislative changes in Kazakhstan aim to liberalize digital asset usage and expand trading platforms, potentially incorporating payment organizations into crypto exchange services and intensifying regulatory oversight.
- Crypto banks, with their range of banking services, will ensure the exchange, storage, and processing of digital assets take place within a controlled framework, aiming to strengthen regulatory authority and improve compliance with anti-money laundering (AML) and countering the financing of terrorism (CFT) regulations.
- The introduction of crypto banks is expected to significantly increase Kazakhstan's investment drawing power, providing a secured regulatory environment that minimizes illegal activities and increases oversight on digital transactions.
- The crypto banks' emergence will stimulate domestic innovation in IT and blockchain technologies, potentially leading to increased investment in these sectors and creating demand for professionals skilled in areas like compliance, blockchain analytics, and anti-money laundering, contributing to the growth of a specialized workforce.
