Kazakhstan Cracks Down on Cryptocurrency and Money Laundering with New Legislation
In a bid to curb money laundering and other illicit activities, Kazakhstan has introduced new legislation regulating digital assets and cryptocurrency mining. Law No. 193-VII on Digital Assets entered into force on April 1, 2023, establishing legal grounds for the issuance, placement, and circulation of digital assets in the country.
Key Provisions of the Law
- Permit requirement: Individuals and legal entities involved in digital asset activities must obtain a permit from the competent authority.
- Financial monitoring: Financial monitoring is mandatory to prevent money laundering.
- Licensing for cryptomining: Obligatory licensing for cryptomining is introduced, along with mandatory accreditation of digital mining pools.
- Registration of hardware and software systems: Separate registration of hardware and software systems for digital mining is required.
Definition of Digital Assets
According to Article 1 of the law, digital assets are defined as property created in electronic digital form with an assigned digital code, including those using cryptography and computing technology. The law distinguishes between “secured digital assets” and “unsecured digital assets,” with secured digital assets being registered through a digital platform for storage and exchange.
Licensing Rules
The licensing rules for digital assets, cryptomining, and crypto exchanges are outlined in Article 4 of the law. Authorized state bodies must maintain registers of persons carrying out activities for the issuance of secured digital assets and hardware and software complexes for digital mining. Individuals and legal entities issuing and circulating secured digital assets are subject to financial monitoring under the Law on Counteracting the Legalization (Laundering) of Proceeds from Crime and the Financing of Terrorism.
Regulations for Digital Mining
The law introduces regulations for digital mining, requiring special licenses for miners and establishing energy consumption quotas for digital miners. The legislation prohibits the issuance and circulation of unsecured digital assets in Kazakhstan, except for activities taking place within the Astana International Financial Centre’s special legal regime.
Expert Opinion
Experts say the new legislation aims to prevent money laundering and other illicit activities associated with cryptocurrency and digital asset trading. “This law marks a significant step forward in regulating the digital asset market in Kazakhstan,” said Dr. Anna Kuznetsova, an expert on financial regulation at Almaty University. “By introducing licensing requirements and financial monitoring mechanisms, the government is taking concrete steps to prevent money laundering and ensure transparency in the digital asset market.”
Industry Response
The legislation has been praised by industry experts for its comprehensive approach to regulating digital assets and preventing illicit activities. However, some critics have raised concerns about the potential impact of the law on small-scale miners and entrepreneurs who may struggle to comply with the new regulations.
Conclusion
As Kazakhstan seeks to establish itself as a hub for digital asset trading and mining, the government’s efforts to regulate the sector are likely to be closely watched by international investors and experts. With its comprehensive approach to regulating digital assets, Kazakhstan is poised to become a major player in the global cryptocurrency market.