A new bill has been proposed in the parliament of Kazakhstan and if implemented, it would only permit registered mining companies to carry out their activities in the country.
The draft of the legislation has been designed to regulate the crypto mining industry comprehensively and reduce what its sponsors believe is the uncontrolled energy consumption of the sector.
Members of the lower house of parliament in Kazakhstan called Mazhilis have proposed legislation that outlines rules that would be applicable to crypto mining in the country.
In the provisions outlined, only crypto mining operations that are authorized by the Astana International Financial Center (AIFC) or foreign entities who have entered into agreements with licensed data centers, will be allowed to mine digital currencies.
Kazakhstan had become a hub for crypto mining last year when China began a crackdown against the industry.
However, the increasing number of mining companies has resulted in a power deficit in the country. The financial hub of the Central Asian nation is recognized as AFIC.
Its goal is to ensure that the growing crypto sector comes under the government’s oversight. Earlier this year, Kazakhstan also permitted crypto exchanges in the country to open local bank accounts.
According to the current rules, crypto mining operations can voluntarily notify authorities about their activities.
The minister of digital development issued an order that regulates the process. However, there is only one-third of crypto mining companies in Kazakhstan have actually completed the registration process.
Ekaterina Smyshlyaeva, a Member of Parliament, said that the energy security of Kazakhstan was at risk because of the consumption of electricity ‘gray’ miners.
The lawmaker stated that the sale of the crypto that is mined is not regulated by the existing legislation or the circulation of digital assets and the role played by local financial service providers.
She said that the procedure for mining coins and their property rights are only regulated at the sub-legislative level for now.
Crypto mining contributions
The State Revenue Committee in Kazakhstan disclosed that the first quarter of 2022 saw the contributions to the state budget that were made by crypto mining operations were around $1.5 billion.
President Kassym-Jomart Tokayev had signed a bill into law back in July, which included amendments to the Tax Code of Kazakhstan.
This included charging a higher tax rate to those engaging in crypto mining activities in the Central Asian country.
The tax rate will now depend on the amount of electricity that is consumed by the crypto mining entity for the mining of bitcoin as well as other coins.
At the beginning of the year, the government had also shut down some crypto mining operations temporarily because of power deficit issues.
Kazakhstan is now making amendments to its deal with Russia for importing more energy that would be directly provided to crypto mining companies in the country.
This would indirectly bring more revenue to Kazakhstan in the form of taxes it charges.