Kazakhstan MP calls for creation of a ‘crypto bank’ to legalize massive gray market

It is time to break crypto trading in Kazakhstan out of the special economic zone, a member of the parliament has said. The overwhelming majority of operations with digital assets are not conducted in the Astana International Financial Center (AIFC), even though current law only allows that activity there. 

Azat Peruaşev, leader of the minority Aq Jol party and member of the Majilis, the lower house of the Kazakhstan parliament, proposed that the country’s central bank and private banks collaborate to create a “crypto bank” to provide a legal platform for operations with cryptocurrencies. Another MP, Ekaterina Smyshlyaeva, proposed legislative reform of digital asset regulations at the same time.

Kazakhstan needs a framework to allow crypto trading everywhere

Peruaşev said 90% of crypto operations in Kazakhstan are currently carried out in a legal gray zone. That enables scams, illicit activities, and tax evasion. 

In a communication addressed to Prime Minister Olzhas Bektenov, Peruaşev said, “A crypto bank, an institution that will take over the functions of the oversight, exchange, and storage of digital assets in the legal field, can become an effective tool for regulating the industry.” In other words, the crypto bank would have functions and authorities that go far beyond those usually associated with banks.

Majilis member Smyshlyaeva also proposed changes in digital asset regulation to the prime minister. The current law on digital assets was passed in early 2023, but Smyshlyaeva said, “Since its passage, the market has changed significantly. […] Today, a transition to the next stage is required.”

Kazakhstan’s crypto laws are behind the times

Smyshlyaeva suggested that operations with digital assets outside the AIFC be decriminalized while infrastructure for those operations is expanded and legal and financial monitoring of exchanges is increased.

Digital assets can only be traded in Kazakhstan through exchanges residing in the AIFC. Those include Binance, Bybit, and others. Residents of the AIFC are subject to laws that apply to the economic zone alone. Even with interest in digital assets growing in the country, very few Kazakhstanis are willing to use those facilities. 

Kazakhstan President Kassym-Jomart Tokayev called for urgent measures to create a new legal framework for crypto traders at a government meeting in January. “Infrastructure for the wider legal circulation of digital assets should be established on an urgent basis. Financial regulators should deal with the formation of the appropriate legislative framework,” he said. 

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