Kazakhstan Approves Crypto Regulation and Mining in First Reading

On October 12, Kazakhstan’s Mazhilis (the lower house of Parliament) approved in the first reading five bills regulating the issuance and circulation of cryptocurrencies on the country’s territory, according to TASS.

Lawmakers prepared a sectoral bill on the digital assets of the Republic of Kazakhstan and four related regulatory acts.

All cryptocurrency trading is to be conducted on the basis of the Astana International Financial Centre to mitigate risks to the financial system.

“Cryptocurrency in Kazakhstan is not a means of payment, and its circulation is prohibited in the country. In the emerging ecosystem, a new financial institution is developing — Kazakhstani crypto exchanges,” said Ekaterina Smyshlyaeva, a member of the Mazhilis committee on economic reform and regional development.

According to unofficial data presented by her, more than 1 million residents of Kazakhstan are registered on international Bitcoin exchanges. At the same time, according to her, citizens turn to the services of black-market exchangers.

“Transferring all cryptocurrency operations to Kazakh exchanges makes them transparent. Crypto exchanges are subject to financial monitoring and, according to the draft, will be integrated with the information systems of the State Revenue Committee,” emphasized Smyshlyaeva.

Mining of cryptocurrencies will be regulated and licensed by the Ministry of Digital Development, Innovation and Aerospace Industry. Starting in 2024, miners will be required to exchange up to 75% of their capital on local trading platforms to sustain their operations.

“Through the bills, we require miners to obtain licenses in Kazakhstan, create legal entities and become full taxpayers. Mining pools become part of the economy,” the deputy said.

A registry of mining equipment is being created to curb the operation of illegal data-centers. The bills also introduce controls over energy consumption by mining, and the Ministry of Energy gains powers to quota electricity volumes based on the system balance.

“This opens up additional opportunities to attract investment for the construction of new generation capacity at deposits and in renewable energy sources,” explained a member of the Mazhilis committee.

In addition to existing value-added tax on imported equipment and a digital mining tax per kilowatt, a corporate income tax on miners’ rewards, a mining-pool income tax and a tax on crypto-exchange transactions are planned.

According to Smyshlyaeva, the new rules will help “reorient investor interest from the resource potential to the turnover of mining products.”

Among other things, the bills regulate the market for asset-backed digital assets, considered a digital analogue of securities.

Work on the regulatory documents will continue in the Mazhilis committee.

In January, the Kazakh electricity grid operator shut off power to mining farms. Since then the restriction has been extended several times.

Earlier ForkLog reported that the Russian government is discussing supply of electricity to Kazakhstan for the needs of mining companies. The corresponding amendments will be introduced to the existing agreement on the parallel operation of the energy systems of the two countries.

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