In Kazakhstan, the regulation of cryptocurrency exchanges is still in the process of being developed. However, the National Bank of Kazakhstan has issued guidance on the use of cryptocurrencies and has established a framework for the regulation of cryptocurrency exchanges.
The NBRK, the ARDFM, the AIFC, and the MDDIAI passed pilot regulations on May 2022, allowing cryptocurrency transactions on Kazakhstani soil under specific restrictions. Exchanges are required to secure a license, and banks are required to declare their allegiance, in order to take part in the pilot project. The legal structure was created in accordance with the highest international standards, guaranteeing proper transaction supervision and the security of client funds.
To operate in the country, bitcoin exchanges are required to register with the National Bank and get a license. Exchanges must fulfill a number of conditions in order to be granted a license, including having enough capital, proving they are in line with anti-money laundering and counter-terrorism funding laws, and having a strong IT infrastructure in place to safeguard customer data.
The National Bank of Kazakhstan has also built a framework for the regulation of cryptocurrency payments and has released guidelines on the usage of cryptocurrencies for payments. This paradigm treats cryptocurrency payments as being similar to payments made in conventional fiat money, and businesses that accept cryptocurrency payments are subject to the same rules as businesses that take conventional currency payments.
Overall, Kazakhstan’s regulation of cryptocurrency exchanges aims to preserve the market’s integrity and safeguard users from financial crime. Kazakhstan may offer a secure environment for the exchange of cryptocurrencies by mandating that exchanges register with the National Bank of Kazakhstan and abide by financial laws.
A ban on cryptocurrency transaction advertisements is expected to go into effect by the end of December 2022, and a unique method for regulating secured assets has already been introduced by way of an analogy with securities.
To enable a pilot mechanism for converting cryptocurrency at the Astana International Financial Centre, the government of Kazakhstan has proposed changes to national law. The Republic of Kazakhstan is home to the AIFC, a major financial center. The Constitutional Statute of the Republic of Kazakhstan designates it as a special area. The primary goals of the AIFC are to secure independent regulation and a favorable environment for foreign investment.
At the Astana International Financial Center, currency conversion is already being done as part of a unique trial project. The regulatory environment and national legislation both underwent rather inventive adjustments as a result. They are prepared to move forward now. As a financially free zone situated in Astana, Kazakhstan’s capital, the AIFC began operations in 2018. It is built on the Dubai International Financial Center and has a unique legal system that is based on English common law. In general, entities operating within the AIFC are exempt from regulatory regulations that apply elsewhere in Kazakhstan and are subject to the financial and regulatory laws of the AIFC.
The AIFC regulations permit, among other things, the operation of cryptocurrency exchange platforms inside the AIFC and the circulation of cryptocurrencies.
The following authorizations and regulatory concerns are triggered by the trade of cryptocurrencies for fiat currency within the AIFC:
operating a crypto exchange – a license from the Astana Financial Services Authority, the financial regulator within the AIFC (“AFSA”), for operating a digital asset trading facility:
providing electronic wallet custody services – a license from the AFSA for providing custody for safeguarding and administering digital assets belonging to another person; and
in connection with the first and second bullet points above, qualification as a “participant of the AIFC” requires setting up a legal entity by the laws of the AIFC.
How can I get a Kazakhstan Cryptocurrency Exchange License?
Only operations conducted “in the AIFC” are subject to the regulatory system of the AIFC. Therefore, no limitation on trading cryptocurrencies under the general legislation should be triggered to the extent that the relevant entity/firm conducts its respective activities within the AIFC. In these circumstances, it should be possible for Kazakh people to own cryptocurrencies and deposit and sell them within the bounds of AIFC regulations.
In this regard, the relevant entity would be deemed to be carrying out activities “in the AIFC” so long as it does so through a company created in accordance with the laws of the AIFC, and that company manages those activities on a day-to-day basis, even if those activities are carried out entirely or in part outside the AIFC.
There are a few firms that have already obtained cryptocurrency-related licenses in the AIFC. In this regard, the relevant entity would be deemed to be carrying out activities “in the AIFC” so long as it does so through a company created in accordance with the laws of the AIFC, and that company manages those activities on a day-to-day basis, even if those activities are carried out entirely or in part outside the AIFC.
Empire Global has a team of experienced professionals who will assist you through the entire process of the Kazakhstan License application including assistance in the preparation of documents, submission of the application, and response to any queries from the Agency and Ministry of Economy, and AIFC.