Kazakhstan’s Fonte Capital launches first spot BTC ETF in Central Asia

What’s new? Kazakhstan became the first country in Central Asia to allow trading in spot exchange-traded funds (ETFs) based on bitcoin. On August 13, Astana-based Fonte Capital began trading Fonte Bitcoin OEIC (BETF) shares on the Astana International Exchange (AIX).

CoinDesk

What else is known? Unlike exchange-traded notes (ETNs), the new BETF fund holds bitcoins directly. The custodian is the US-regulated company BitGo, which insures assets worth up to $250 million and protects retail and institutional investors from hacks and counterparty risks, including through the use of cold wallets.

BitGo previously received a license from the German regulator in accordance with the Markets in Crypto-Assets (MiCA) regulation, which allows it to provide services in all EU countries. Also, in the summer, the media reported that BitGo was preparing to go public in the United States through an IPO.

BETF by Fonte Capital is regulated by the Astana International Financial Center (AIFC), which allows crypto trading in the country. The company has been registered with the AIFC since 2022. According to the fund’s sponsors, this jurisdiction can protect assets from freezing related to international sanctions.

The new regulated crypto product could attract foreign capital and integrate local markets into the broader digital asset economy, which is important for Kazakhstan as it seeks to diversify its financial sector.

The ETF structure allows for settlement in-kind (in BTC) and aims to ensure low overall costs while reducing the error of tracking the price of Bitcoin.

The debut of BETF puts Kazakhstan on par with the US, Canada, and Hong Kong, which have also previously approved spot ETFs based on bitcoin.

Neighboring Central Asian countries, such as Uzbekistan and Kyrgyzstan, have taken a more cautious approach, making Kazakhstan the most open market for cryptocurrency investment in the region.

Uzbekistan will launch HUMO to modernize its financial system

The asset will be backed by government bonds

Read More

In May, Kazakh President Kassym-Jomart Tokayev announced the launch of the CryptoCity pilot zone for cryptocurrency payments and declared the country’s ambition to become a Eurasian IT hub.

At the same time, Kanyush Tuleushin, First Vice Minister of Digital Development, Innovations and Aerospace Industry, proposed easing crypto regulations to develop the country as a regional crypto hub. He noted that miners could play a key role in modernizing the country’s energy infrastructure.

Kazakhstan rose sharply in the bitcoin mining rankings after China banned the industry in 2021. The country benefited from an abundance of coal-generated electricity and favorable regulations.