Cryptocurrency mining and exchanges will become legal in Kazakhstan with the final approval of its draft law “On Digital Assets”.
The government of Kazakhstan, one of the most important countries for Bitcoin mining, has approved the draft law “On Digital Assets” in a definitive manner.
The aforementioned law, which regulates exchanges and recognizes cryptocurrency miners, was signed by the country's president Kasim-Yomart Tokaev and will come into force on April 1 this year.
The law was approved by the Senate of Kazakhstan last December and was awaiting the president's signature for its promulgation.
Kazakhstan's Law on Digital Assets
Kazakhstan's law "On Digital Assets" brings with it, among other things, a number of measures to regulate and supervise Bitcoin and other cryptocurrency miners in the territory.
First, the new law will require operators of crypto mining farms and data centers have a license for such activity. According to Dostanova Diana, senior partner at Egen Gregory LLP, mining farms and data centers will need to operate through a crypto mining pool accredited by the country’s authoritative body, the Ministry of Digitalization of Kazakhstan.
Diana also pointed out that Crypto miners will be required by the new law to sell cryptocurrencies extracted from blockchain networks to the country through exchange platforms regulated by the Astana International Financial Centre (AIFC). According to the law, starting next year, miners must sell 50% of their mined cryptocurrencies to Kazakhstan, and starting in 2025, 75%.
Kazakhstan will establish different types of cryptocurrency licenses that will be determined by the applicants, whether they are owners of mining equipment or data centers, Diana said. In addition, the Ministry of Digitalization will be responsible for keeping a detailed record of crypto mining equipment located in the country and conducting regular inspections to verify compliance.
Cryptocurrencies, tokens and ICOs
Another point included in Kazakhstan's law "On Digital Assets" is cryptocurrencies, approved tokens, and ICOs of crypto assets. Apparently, the Kazakh government will issue lists of tokens that can be traded in the country, as well as services related to the crypto industry. Among them, Diana said, are ICOs, or initial coin offerings.
On taxation, the new law also includes amendments to the country's tax code that establish the procedures necessary to determine income from crypto mining as well as fees for issuing licenses for this activity.
Kazakhstan is the third country with the highest Bitcoin hash rate
According to data from the Centre for Alternative Finance at the University of Cambridge (CCAF), Kazakhstan is the third nation in the world with the largest concentration of Bitcoin mining power, after the United States and China.
The important role that this country plays for the main cryptocurrency in the market was motivated by the bans that China imposed on cryptocurrency trading and mining activity. The restrictions of the Chinese government pushed crypto-asset miners to leave the country and look for other regions where they could carry out their activity. Kazakhstan, a neighbor of China, benefited from the Mass exodus of crypto miners.
Source: CCAF
However, while Bitcoin miners were initially enjoying many benefits in Kazakhstan, the political situation turned against crypto miners and ended up affecting this growing industry.
In addition to this, the country's government initiated a series of proceedings against several crypto mining farms operating clandestinely, pointing out its need to control their energy consumption. Also, Kazakhstan implemented a regulated restriction on cryptocurrency mining, allowing mining farms to operate at certain set times.
Therefore, although Kazakhstan is considered one of the most promising destinations for the development of cryptocurrencies and crypto mining, it has also been one of the most puzzling for those involved in this activity.
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