Kazakhstan’s New Law on Digital Assets: A Game-Changer for the Crypto Industry?

In an effort to position itself as a leader in digital asset regulation, Kazakhstan has recently enacted its robust new Law on Digital Assets. This legislation aims to create a legal framework for the development of activities related to digital assets and digital mining, thereby stimulating economic growth and competitiveness in the Republic of Kazakhstan.

What are Digital Assets?

According to the law, digital assets are defined as property created in electronic and digital form with the assignment of a digital code, including those using cryptography and computer computing, registered and secured by the immutability of information based on the technology of a distributed data platform. This includes cryptocurrencies, tokens, and other digital means of exchange.

Regulations for Digital Assets

Under the new law, persons carrying out activities using digital assets must obtain an appropriate permit from an authorized state body. Secured and unsecured digital assets are not recognized in Kazakhstan as a means of payment, financial asset, or financial instrument, with taxpayers engaged in the issuance and circulation of secured digital assets subject to financial monitoring.

Digital Mining Regulations

The legislation also introduces regulations for digital mining, requiring miners to obtain a license issued for a period of three years. Digital miners will be divided into two types: those with a digital mining data center and those without, but who perform digital mining using equipment located in a digital mining data processing center.

Electricity Consumption and Taxation

The law addresses concerns over power outages and potential shortages by regulating electricity consumption by miners. The government has introduced measures to regulate the industry, including the introduction of a mining tax since 2022.

Impact on Foreign Investors and Industry Growth

The move has been welcomed by foreign investors who have invested in mining and infrastructure projects in Kazakhstan. Initiatives on developing mining industries through renewable energy sources have also been proposed.

International Perspective

The International Monetary Fund (IMF) has warned that the growth rate of cryptocurrency mining threatens financial stability worldwide, calling on regulators to take decisive preventive action.

Expert Insights

Aidana Tastanova, a third-year law student at the Moscow State Institute of International Relations, sees the new law as a step towards creating clear rules of the game for the industry. “This law will create a legal market for digital assets, create a legal basis for the development of the blockchain technology industry, and stimulate investment in digital assets in Kazakhstan,” she said.

Implementation and Impact

The implementation of the new law is expected to have a positive impact on the country’s economy, increasing revenues to the state budget and creating new job opportunities. As the country continues to navigate the complexities of the digital asset market, it remains to be seen whether Kazakhstan will indeed become a regional crypto hub in Central Eurasia.

Conclusion

Kazakhstan’s new law on digital assets is a significant step towards regulating the industry and addressing concerns over its uncontrolled growth. The country aims to create a legal market for digital assets, form a legal basis for the development of blockchain technology, and stimulate investment in digital assets. Only time will tell if this move will indeed catapult Kazakhstan to the forefront of digital asset regulation and make it a regional crypto hub in Central Eurasia.