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Kazakhstan Takes a Step Towards Blockchain and Financial Crime Prevention with New Digital Assets Law
April 1, 2023 marked the coming into force of Law No. 193-VII on Digital Assets in the Republic of Kazakhstan, aimed at regulating the issuance, placement, and circulation of digital assets, as well as preventing financial crimes.
Background
The law was signed by President Kassym-Jomart Tokayev on February 6, 2023. It introduces a range of measures to prevent financial crimes, including obligatory licensing for cryptomining, mandatory accreditation of digital mining pools, and separate registration of hardware and software systems for digital mining.
Measures to Prevent Financial Crimes
- Obligatory licensing for cryptomining
- Mandatory accreditation of digital mining pools
- Separate registration of hardware and software systems for digital mining
- Registration with a special state registry and obtaining permits from authorized state bodies for individuals and legal entities involved in mining secured digital assets
Definition of Digital Assets
The law defines digital assets as property created in electronic form with an assigned digital code, including those using cryptography and computing technology. It distinguishes between “secured digital assets” and “unsecured digital assets”, the former being registered through a digital platform for storage and exchange of secured digital assets, while the latter is received as a reward for maintaining consensus in a blockchain.
Regulations on Digital Mining
- Special licenses for miners
- Setting energy consumption quotas
- Permission to purchase electricity from the national grid only if it contains surplus power, except in cases where they use renewable energy or imported power, or produce their own electricity off-grid
Financial Monitoring and Control
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. State inspectors will monitor and control digital asset activities following procedures prescribed by the Entrepreneurial Code of the Republic of Kazakhstan.
Supplementary Legislation
Law No. 194-VII, signed into law by President Tokayev on February 6, 2023, introduces regulations on the supply and use of electricity by digital miners. The law aims to reduce the environmental impact of digital mining while ensuring a stable power supply.
Conclusion
The new laws are expected to enhance Kazakhstan’s reputation as a hub for blockchain technology and digital assets, while also strengthening financial crime prevention measures in the country.