Kazakhstan develops a bill on mining licensing

What’s new? On September 29, the lower house of the Parliament of the Republic of Kazakhstan presented a bill “On digital assets in the Republic of Kazakhstan” and its accompanying amendments. The purpose of the document is to license mining activities and provide legal participants of cryptocurrency mining with quotas on electricity consumption. This is reported by the local publication Vlast.

Vlast material

What else is known about the law? Deputy Ekaterina Smyshlyaeva believes that the industry of legal cryptocurrency mining is a capacious investment industry for Kazakhstan. According to her, with adequate legal regulation, mining can provide additional tax revenues and contribute to the development of the domestic IT-industry.

At the same time, Smyshlyaeva stressed that the circulation of unsecured digital assets under current legislation in Kazakhstan is prohibited. All operations with digital assets, including their production and the work of crypto exchanges, in the framework of the pilot project is carried out only by the Astana International Financial Center (AIFC). It is noted that such activities are not yet regulated by the norms of the law “On AIFC.” Also, the sale mechanisms of mined cryptocurrency and the role of local financial service providers are not regulated in Kazakhstan.

Smyshlyayeva explained that the law, which is being developed, is designed to solve the problematic issues. According to the document, concepts from the field of mining are introduced, as well as licensing of such activities, and criteria for persons engaged in mining of cryptocurrencies in the legal field of AIFC are defined. It also introduces the concept of “energy quota” for licensed miners.

Amendments will also affect the tax legislation. Thus, in terms of regulation of unsecured and secured digital assets on the territory of the Republic of Kazakhstan, deputies propose referring norms to a special control procedure, including the issuance and exchange of cryptocurrencies. In addition, the order of interaction of mining companies with the AIFC is defined.

Smyshlyaeva stressed that, according to the current legislation, the order of notification about the beginning of mining is voluntary and regulated by the order of the Minister of Digital Development. At the same time, only one third of the companies involved in cryptocurrency mining have voluntarily registered in the state body's registry so far.

It is reported that the uncontrolled use of electricity by gray miners has led to its shortage, which, in turn, poses a threat to the country's energy security.

President of Kazakhstan Kassym-Jomart Tokayev said he is ready to develop a project on conversion of cryptocurrencies in AIFC, provided that its pilot launch will be successful. According to Tokayev, “Kazakhstan intends to become a leading player in the field of new digital technologies, cryptocurrency ecosystem, as well as regulated and transparent digital mining.”

In June, Kazakhstan approved rules for interaction between cryptocurrency exchanges and second-tier banks. Platforms registered with AIFC were allowed to have bank accounts. The project will operate in pilot mode until the end of 2022. In August, cryptocurrency exchange Binance received approval in principle to operate a digital asset platform and provide custodial services at AIFC.

On September 29, a private Kazakh bank conducted the first transaction to buy bitcoin for fiat money. Intebix, a local cryptocurrency exchange, was the second party to the transaction. The bank's nearest plans also include the issue of a cryptocurrency payment card for residents of Kazakhstan.