Kazakhstan’s government recently gave its approval for regulations aimed at governing the interaction between cryptocurrency exchanges registered in the country with that of traditional financial institutions. Under the new rules, crypto exchanges will now be able to open accounts with local banks.
Making Kazakhstan a Crypto Hub
According to the latest announcement, the representatives of financial regulators in Kazakhstan, its central bank, the Ministry of Development and the digital and financial asset sectors came together to form a working group. This group has recently adopted regulations under which second-tier banks in the country will be able to offer their services to registered crypto exchanges in Kazakhstan. The Astana International Financial Center (AIFC) registers the exchanges in question.
This step is part of an overall project focused on launching a regulatory framework in Kazakhstan that could help the country in becoming a crypto hub. A press release disclosed that this is a pilot program and crypto trading platforms that have been authorized by the Astana Financial Services Authority (AFSA) will be able to participate in it.
China’s Crackdown on Crypto Mining
Last year, China had cracked down against crypto mining activities in the country and this had driven miners out into other areas where they could access energy resources. Kazakhstan had become one of the hotspots due to the availability of cheap energy. However, Bagdat Musin, the Digital Development Minister, said that the crypto industry does not just constitute of crypto mining.
The government official said that it also comprises of digital wallets, crypto exchanges and blockchain platforms as well. He said that it was not very different from other industries that should work for the economy’s benefit. He said that making money via crypto exchanges was the next step to take in terms of financial innovation.
He insisted that the Central Asian country needs to come up with a complete ecosystem in order to ensure that cryptocurrencies mined with the country’s energy are traded on local exchanges. In this way, the income generated from these would remain in the country.
Regulation of Digital Currencies
Digital currency trading will now be regulated in Kazakhstan, thanks to this pilot project of the Digital Ministry. This will ensure the protection of both institutional and retail investors in the country. If the pilot program is a success, the authorities will amend the country’s legislation that are applicable to the AIFC.
Nurkhat Kushimov, the Director of AFSA, said that it was the only regulatory organization that was monitoring the activities of fintech companies. He said that they thoroughly assess and supervise entities that apply for a license. The official said that their aim was to develop an environment that can benefit stable and trustworthy companies, which customers can trust.
This is certainly a good development for the crypto industry of Kazakhstan and comes after the National Bank of Kazakhstan had recently said that they were monitoring the industry and talking about legalization was not on the cards for now. But, it did add that they intended to capitalize on the benefits cryptocurrencies offer.