Some $15 billion worth of crypto assets have been transferred out of Kazakhstan as a result of insufficient regulations, the country’s central bank revealed.
The announcement comes as financial authorities in Astana prepare to adopt comprehensive rules that will legalize and govern cryptocurrency investments and trading.
Kazakhstan loses billions of U.S. dollars’ worth of digital currency
Crypto assets for around $15 billion have been withdrawn from Kazakhstan, according to an estimate produced by the Central Asian nation’s monetary authority.
The central bank’s Deputy Chairman Berik Sholpankulov unveiled the staggering total to local media this week, attributing the “leak,” in his words, mainly to the lack of proper regulations.
Quoted by the Kazinform news agency, the official elaborated:
“It’s a fact that administrative and legal regulation is not sufficiently structured so that citizens could invest safely.”
At a press conference, Sholpankulov noted that financial regulators are now developing a more comprehensive approach that will tighten control over the circulation of digital assets and introduce criminal and administrative liability for illegal transfer of crypto funds abroad.
In the future, the authorities in Astana will be able to track cryptocurrency transactions, he added, admitting it’s not currently possible to trace the $15 billion exported from the country so far. Kazakhstan now seeks to tap into a specialized system that will provide the technological means to do that.
Sholpankulov also vowed to hold another briefing to share details about where the digital money was sent to and identify those who did it “name by name,” making it clear they will be subject to administrative and criminal prosecution.
Kazakhstan moves to legalize crypto exchange and investment
Cryptocurrency turnover has been growing in Kazakhstan since the country attracted a significant number of mining companies in the wake of the ban imposed on the industry by the Chinese government a few years ago.
With a few available options to sell their coins in the country, miners have been transferring profits outside Kazakhstan, despite a requirement to exchange 75% of the minted crypto through trading platforms registered at the state-controlled Astana International Financial Center (AIFC).
Existing regulations are significantly limiting opportunities for legal crypto trading and investing. According to government estimates, more than 91% of the $4.1 billion worth crypto transactions in 2023 were conducted in the gray market.
However, the government seems to have finally realized it’s been losing money in the current circumstances, as it recently announced plans to legalize crypto trading beyond the jurisdiction of the financial hub in the capital city.
Earlier this week, the National Bank of Kazakhstan (NBK) said it has developed legislative amendments aimed at achieving comprehensive regulation of the digital assets market. These envisage the licensing of cryptocurrency exchanges operating outside the AIFC.
In the past three years, Kazakhstan has collected some $35 million in taxes from the crypto mining sector alone, the country’s Deputy Minister for Digital Development Kanysh Tuleushin highlighted. He emphasized that lifting the restrictions on trading would significantly increase budget revenues.
In an op-ed piece published by the Kazakhstanskaya Pravda daily, Tuleushin called for adopting “flexible rules” for the crypto space and estimated:
“Just a 10% tax could generate more than 190 billion tenge per year ($373 million), enough to build dozens of new schools and hospitals.”
Former Soviet republics across Central Asia have been particularly active in the past months in efforts to tap into the growing crypto market. Kyrgyzstan recently secured Binance’s assistance in introducing cryptocurrency payments, while Tajikistan launched its first digital asset exchange.
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