Kazakhstan legalizes crypto, welcomes Russian refugees: Know the implications

The Kazakhstan government plans to officially authorize local banking institutions to open bank accounts for cryptocurrency transactions. They will formalize a trading system at the Astana International Finance Center that will help convert cryptocurrency to cash.

The development took place just after many people from Russia moved to Kazakhstan. President Kassym-Jomart Tokayev said on Sep 27, “Most of them are forced to leave because of the hopeless situation. We must take care of them and ensure their safety.”

Eurasian Bank and Intebix executed the bank’s first regulated crypto-for-fiat transaction, according to a media report. It is a significant turning point in the history of Kazakhstan to accept cryptocurrency, and buying coins with their own currency, the tenge.

The objective is to dominate the global Bitcoin economy, digital technologies, and control mining, informed Kassym-Jomart Tokayev, the president of the transcontinental country. And to implement this Kazakhstan’s national laws have been amended by the government.

Kazakhstan’s president informed that the country is ready to legalize a mechanism for converting cryptocurrencies to cash if there is demand, said a local news agency on Sept. 28. 

There could be various implications on this, according to Peak Blockchain analyst, Nishant Gupta, “Kazakhstan has opened its doors to digital assets to protect its economy. This strategic move follows the country’s efforts to maintain relations with the West and Russia. This takes us one step forward towards the global acceptance of Crypto.”

Another senior analyst from Peak blockchain Garvit Taneja brings forth a detailed analysis and implications (shared below) of this development as Kazakhstan allows legal coin purchases by launching the first banking operation with crypto assets. 

A massive step was taken by Kazakhstan to formalize a trading system that would convert cryptocurrency to cash. This would mean that the country is ready to legalize cryptocurrency. It would be seen as a big positive in the crypto ecosystem as more and more countries are now looking at the crypto industry in a very optimistic manner.

The Eurasian bank and Intebix also announced that they have jointly completed the bank’s first regulated crypto purchase for fiat money. Apart from this, other crypto companies in the pilot crypto project phase include ATAIX as well as Kazakhstan’s largest bank, Halyk and Altyn Bank.

Way Forward

• Russia is ready to support Kazakhstan on this initiative and would provide electricity to their neighbouring country for all crypto mining enterprises.

• The two nations have signed a bilateral agreement governing the coordinated operation of their energy systems.

• The lawmakers in Kazakhstan also aim to reduce the uncontrolled use of electricity by “gray miners”. They have proposed a bill that seeks to reserve the opportunity to mint digital coins only for mining companies registered within the Astana International Financial Centre.

• Eurasian Bank would be looking to issue a crypto card soon this year that will be linked to Intebix wallet and holders will be able to pay in tenge while spending their digital coins.

Implications

• With its low and subsidized electricity rates, Kazakhstan has attracted various mining companies since the Chinese government cracked down on the industry.

•  This would mean that Kazakhstan can be another hub for crypto mining companies in the near future.

• Since Russia’s President declared a partial mobilization of reserves for the ongoing conflict with Ukraine, Many Russians have moved to Kazakhstan, which would mean higher adoption of cryptocurrency.

• Even though Kazakhstan has taken the first step to legalize cryptocurrency in the country, the country will continue running pilot programs throughout this year to gauge the demand and security of the crypto ecosystem.