Kazakhstan Lawmaker Proposes National Crypto Bank to Combat Illegal Transactions

Kazakhstan’s lawmaker Azat Peruashev has proposed the establishment of a “national crypto bank” to combat the rampant illegal cryptocurrency transactions within the country, aiming to integrate into the global crypto economy.

• Proposal for a national crypto bank in Kazakhstan
• Aims to combat high rates of illegal crypto transactions
• Part of broader regulatory reforms in the crypto sector

Azat Peruashev, a member of the Mäjilis, Kazakhstan’s lower house of parliament, has highlighted the pressing need for a “national crypto bank” to serve as a legal exchange and custody platform for cryptocurrencies. This initiative comes as a response to the staggering 90% of cryptocurrency transactions in Kazakhstan that occur outside the legal sector, according to Peruashev. The lawmaker argues that the current lack of legal infrastructure for cryptoassets has led to an unregulated market, ripe for scams and illegal financial outflows. To clarify, “cryptoassets” refer to digital currencies like Bitcoin and Ethereum, which operate on blockchain technology.

Peruashev’s proposal aims to introduce government oversight to protect citizens from scammers and reduce the outflow of money from Kazakhstan. He stated,

“Kazakhstan lacks legal infrastructure for the […] use of [cryptoassets]. Instead, we have a [partial] ban on the circulation of cryptocurrencies. This means there is a lack of state regulation in the crypto market.”

The national crypto bank, as envisioned by Peruashev, would control, exchange, and store digital assets in a legal manner, offering a safer environment for cryptocurrency users.

The push for regulatory reforms in Kazakhstan’s crypto sector is gaining momentum, with President Kassym-Jomart Tokayev advocating for the expansion of the country’s crypto infrastructure. Another lawmaker, Ekaterina Smyshlyaeva, has proposed decriminalizing individual crypto trading on licensed platforms while tightening control over licensed crypto operators. These efforts reflect a broader initiative to integrate Kazakhstan into the global financial system while curbing the dark side of crypto transactions.

Despite past challenges, such as power outages in 2022 leading to restrictions on crypto mining, Kazakhstan remains an attractive destination for miners due to its low energy prices. “Hash rate allocation” simply refers to the amount of computing power dedicated to mining cryptocurrencies. The country’s crypto mining sector continues to grow, with companies like Canaan increasing their hash rate allocation in Kazakhstan. The Astana International Financial Center (AIFC), a hub for financial activities, plays a crucial role in the country’s crypto landscape, hosting legal crypto operations, including branches of major exchanges like Binance and Bybit.

While the proposal for a national crypto bank could help legitimize and regulate the crypto market in Kazakhstan, it also raises important questions about the balance between regulation and the decentralized ethos of cryptocurrencies. For those new to the space, “decentralized ethos” refers to the belief that no single person or group should control cryptocurrencies. The introduction of such a bank could potentially increase government control over digital assets, which might conflict with the principles of decentralization and financial freedom that many in the crypto community hold dear.

However, the potential benefits are significant. A national crypto bank could not only protect citizens from scams but also enhance tax revenues by bringing more digital asset circulation into the legal domain. This could lead to economic development and technological advancement in Kazakhstan, positioning the country as a leader in the global crypto economy. Yet, the challenge lies in implementing these regulations without stifling innovation or infringing on the privacy and autonomy that cryptocurrencies promise.

From a Bitcoin maximalist perspective, this proposal might be seen as a threat to Bitcoin’s decentralized nature. Bitcoin maximalists, who advocate for Bitcoin as the primary cryptocurrency, might argue that a national crypto bank could undermine the very principles Bitcoin was built on, potentially leading to more centralized control over digital assets.

In the context of effective accelerationism (e/acc), the national crypto bank proposal could be seen as a way to accelerate the adoption of cryptocurrencies but at the risk of increased centralized control. This tension between acceleration and decentralization is a critical point of discussion. For more on this topic, see government control vs cryptocurrency decentralization.

Critics might argue that the national crypto bank is a band-aid solution to a more systemic issue of regulatory inadequacy. They might question whether other measures, such as stricter enforcement of existing laws or international cooperation, could address the problem of illegal transactions more effectively without infringing on the decentralized nature of cryptocurrencies. It’s a classic case of trying to put the genie back in the bottle – but in this case, the genie is a decentralized digital currency that thrives on freedom from central control. For more discussion on this, see Kazakhstan illegal crypto transactions.

Key Questions and Takeaways

• What is the purpose of the proposed national crypto bank in Kazakhstan?

  The purpose is to serve as a legal exchange and custody platform for cryptocurrencies, aiming to protect citizens from scammers, reduce illegal transactions, and prevent money from leaving the country.

• What percentage of cryptocurrency transactions in Kazakhstan are illegal?

  Approximately 90% of cryptocurrency transactions in Kazakhstan occur outside the legal sector. For more details, see Kazakhstan cryptocurrency illegal transactions percentage.

• How has Kazakhstan’s government historically approached cryptocurrency regulation?

  Kazakhstan has had a mixed approach, initially fostering a growing mining sector but later imposing restrictions due to power outages. There is now a push for more structured regulation through proposals like the national crypto bank. For more on regulatory reforms, see regulatory reforms in cryptocurrency Kazakhstan.

• What are the broader implications of the proposed crypto bank for Kazakhstan’s economy?

  The proposed crypto bank could help integrate Kazakhstan into the global crypto economy, attract legitimate business, reduce the shadow economy, and increase tax revenues. However, it also risks increasing government control over decentralized technologies.

• What role does the Astana International Financial Center play in Kazakhstan’s crypto landscape?

  The AIFC serves as a hub for legal crypto operations, hosting branches of major international exchanges like Binance and Bybit, facilitating regulated crypto activities within the country.

• How might Bitcoin maximalists view the national crypto bank proposal?

  Bitcoin maximalists might see the national crypto bank as a threat to Bitcoin’s decentralized nature, potentially leading to more centralized control over digital assets.

• What is the relationship between the national crypto bank proposal and effective accelerationism?

  The proposal could align with effective accelerationism by promoting the rapid adoption of cryptocurrencies, but it risks increasing centralized control, which conflicts with the principles of decentralization.

• What are potential counterarguments to the national crypto bank proposal?

  Critics might argue that the national crypto bank is not the most effective solution and that stricter enforcement of existing laws or international cooperation could address illegal transactions without compromising the decentralized nature of cryptocurrencies.