Financial Crime World

Kazakhstan Cracks Down on Cryptocurrency and Financial Crime with New Law

Astana, Kazakhstan - April 1, 2023

In an effort to combat growing financial crime and regulate the booming cryptocurrency industry, the Kazakh Parliament has passed a new law aimed at combating money laundering and terrorist financing.

New Law Regulates Digital Assets in Kazakhstan

Law No. 193-VII on Digital Assets in the Republic of Kazakhstan came into effect on April 1, 2023, introducing strict regulations for the issuance, placement, and circulation of digital assets, as well as the activities of cryptomining companies.

Key Provisions

  • Individuals and legal entities involved in mining secured digital assets must obtain a permit from the competent authority.
  • State inspectors will monitor and control digital asset activities following the procedure prescribed by the Entrepreneurial Code of the Republic of Kazakhstan.
  • Licensing rules for digital mining require applicants to meet certain standards in terms of equipment, location, and security.
    • Digital mining pools must comply with information security requirements and undergo a test report before being granted special registration.
  • All transactions involving digital assets obtained through digital mining in Kazakhstan must be conducted only through licensed digital asset exchanges operating under the Astana International Financial Centre (AIFC).
  • The law requires at least 50% of digital assets produced by digital miners in Kazakhstan to be sold during the period from January 1, 2024, until January 1, 2025, increasing to 75% starting January 1, 2025.
  • The law prohibits the issuance and circulation of unsecured digital assets, except for activities that take place within the special legal regime of the AIFC.

Regulations on Electricity Supply

In a separate development, President Kassym-Jomart Tokayev signed Law No. 194-VII on Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Digital Assets and Informatization, which introduces regulations on the supply and use of electricity by digital miners.

  • The law establishes energy consumption quotas for digital miners.
  • Prohibits digital miners from purchasing electricity from the national grid unless it contains surplus electricity. However, these limitations will not affect:
    • Miners that use renewable energy or imported power
    • Miners who produce their own electricity off the grid

Goals and Impact

The new laws aim to strengthen Kazakhstan’s financial system and combat money laundering and terrorist financing by regulating the activities of digital asset exchanges and ensuring transparency in cryptocurrency transactions.

In a statement, President Tokayev emphasized the importance of these measures in maintaining financial stability and preventing illicit activities. “The adoption of this law is a significant step towards creating a modern and secure financial system in Kazakhstan,” he said. “It will help to prevent financial crimes and ensure the transparent and stable development of the digital asset market.”