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Kazakhstan’s Big Fix For its 90% Crypto Black Market

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  • Kazakhstan aims to create a national crypto bank to regulate 90% of currently illegal transactions, ensuring transparency and legal oversight.
  • The bank will centralize monitoring of exchanges and mining, integrating crypto into the national financial system and preventing illegal activities.
  • This move seeks to legitimize the crypto sector, attract foreign investment, and end shadow operations through state-level institutional control.

Kazakhstan is planning to establish a national crypto bank to regulate all cryptocurrency transactions in the country. Lawmakers claim that 90% of crypto operations currently take place outside the legal framework. This state-backed framework is aimed at mitigating risks for both users and the economy.

The new institution, proposed by Azat Peruashev, will serve as a central authority for monitoring and facilitating legal crypto activity, including exchanges, mining operations, and on-chain transactions.

Some of the key objectives of the crypto bank would be to ensure compliance and transparency across all digital asset activities. Integrate crypto into the national financial system with proper oversight. And prevent illicit transactions, tax evasion, and unauthorized trading.

Back in 2022, Kazakhstan accounted for 18% of the global “hash rate” – the amount of computing power required to mine BTC. Before China’s crackdown on bitcoin mining, the figure was just 8%. Kazakhstan’s crypto mining farms are mostly powered by aging coal plants that are causing a lot of concern for authorities as they seek to decarbonize the economy.

Kazakhstan’s Crypto Crackdown: From Grey Miners to State Bank

At the time, the Kazakh government planned to crack down first on unregistered “grey” miners which the government estimates might be consuming twice as much power in comparison to the “white” or the officially registered ones

The latest move could legitimize the crypto sector while paving the way for foreign investments and regulated platforms. It could also attract local investments and boosts tax income as well as position the nation as a fintech hub, luring global crypto businesses. All these might inspire other countries to rethink crypto rules, pushing for global regulatory harmony

Overall, it signals a growing trend of state-level crypto integration, not just in adoption but also institutional control. Looks like the era of shadow crypto operations might be coming to an end in Kazakhstan as regulation is stepping in fast.

Binance And Kazakhstan Join Hands To Test CBDC On BNB Chain

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The cryptocurrency sector has seen Binance and Kazakhstan make news over the past several months. The nation was shown warmly embracing the cryptocurrency exchange. More recently, the company was successful in getting a permit to work there. Changpeng Zhao, CEO of the exchange, also disclosed that the nation would test the integration of its CBDC on the BNB Chain.

The CEO of Binance, CZ, noted in a recent Twitter conversation that the exchange has presented the idea of the BNB Chain to the National Bank of Kazakhstan [NKB] earlier. The notion of fusing the BNB Chain with the Digital Tenge emerged. To further explain, CZ tweeted,

“Looking forward to NBK preparing CBDC use cases to see how they could be integrated into #BNB Chain to bridge the gap between traditional banking and the crypto ecosystem.”

It should be mentioned that the government and central bank of Kazakhstan have been preparing to launch their own CBDC for a while now. NKB had previously stated that the Digital Tenge would be released by the end of 2022.

The NKB recently conducted a CBDC “pilot in a controlled environment and with real consumers and merchants,” CZ added.

Binance To Head Kazakhstan’s Crypto World

Binance was spotted building the groundwork to dominate the Kazakhstan cryptocurrency industry, as was previously mentioned. Binance is anticipated to assist the country in market regulation, despite the exchange already having permits to operate in the area. In accordance with a Memorandum of Understanding [MoU] that had already been signed, the company aimed to assist the nation in developing crypto-related rules.

With the Agency of the Republic of Kazakhstan for Financial Monitoring, the company just inked another MOU. The exchange is anticipated to help the authorities in this by identifying and removing cryptocurrencies that have been gained unlawfully.

Now that the exchange is supporting Kazakhstan’s CBDC initiatives, Binance is probably unstoppable.

In other news, the crypto exchange has also announced the launch of Binance Oracle, a new data feed network that enables blockchain smart contracts to interact with actual data, starting with the cryptocurrency exchange’s own internal blockchain service, BNB Chain.

Binance Signs MoU With Financial Monitoring Agency of Kazakhstan

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Binance today announced the signing of an MoU (Memorandum of Understanding) with Kazakhstan’s Financial Monitoring Agency. The parties indicated a mutual interest in the safe growth of virtual asset markets in the nation as well as the construction of a long-term and robust framework for interaction in the agreement.

Zhanat Kaldybekovich Elimanov, Chairman of the Financial Monitoring Agency of the Republic of Kazakhstan, leaders and Financial Monitoring Agency employees from the Republic of Kazakhstan, and members of the Binance ecosystem attended the meeting to sign the Memorandum of Understanding.

Binance’s MoU will help ramp up mutual support in the crypto sphere

The signing of the memorandum is primarily for the parties’ cooperation and mutual support in the areas of crypto asset circulation and information exchange, identification, and blocking of virtual assets obtained through criminal means, as well as those destined for the legalization (laundering) of funds raised from crime and terrorism financing.

“Binance has the most robust compliance program in the industry, including anti-money laundering (AML) and global sanctions principles, as well as tools to proactively detect suspicious accounts and fraudulent activity.”

said Tigran Ghambaryan, VP of Global Intelligence and Investigations

Additionally, Tigran Gambaryan, Vice President for Global Intelligence and Investigations at Binance, gave a report on “Investigations in the Cryptosphere” at the meeting with the Financial Monitoring Agency of the Republic of Kazakhstan.

Chagri Poyraz, the head of the exchange’s global sanctions department, gave a report on the topic of “Typologies of sanctions evasion using cryptocurrencies, suppression of illegal activities” during the meeting of representatives from Binance and the Agency of the Republic of Kazakhstan for Financial Monitoring.

The Memorandum was signed as part of a global training program for officials from regulatory and law enforcement organizations all around the world.

The program’s primary objective is to strengthen ecosystem collaboration with national and international law enforcement in the fight against financial and cybercrime.

The Binance Law Enforcement Training Program has previously been conducted in Israel, Canada, Brazil, Brazil, France, Germany, Italy, the United Kingdom, and Norway. In the next months, similar incidents will occur in other areas and nations.

Over the past few months, Binance has been successful in getting clearance and registration in France, Italy, and Spain thanks to stringent compliance and AML processes, as well as collaborations with law enforcement.

Binance Joins Hands With Kazakhstan to Develop a Crypto Framework

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Binance, the world’s largest cryptocurrency exchange, and blockchain infrastructure provider, announced the signing of a Memorandum of Understanding with Kazakhstan’s Ministry of Digital Development, Innovations, and Aerospace Industry.

The parties stated a shared interest in the country’s virtual asset market development in the agreement.

The Memorandum of Understanding was signed during CZ’s official visit to Kazakhstan. Binance CEO Changpeng Zhao visited Kazakhstan on May 25, 2022, and met with President Kassym-Zhomart Tokayev, Timur Suleimenov, First Deputy Chief of Staff of the President of Kazakhstan, and Bagdat Musin, Minister of Digital Development, Innovation, and Aerospace Industry of the Republic of Kazakhstan.

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Binance Joins Hands With Kazakhstan to Develop a Crypto Framework 2

Kazakhstan will develop a regulatory crypto framework with Binance

Binance will assist in the development of the Republic of Kazakhstan’s legislative framework and regulatory policy for crypto-assets.

Under the terms of the agreement, the Republic of Kazakhstan’s Ministry of Digital Development, Innovations, and Aerospace Industry and Binance will look for ways to integrate banking infrastructure into the cryptocurrency market, as well as facilitate the development and implementation of distributed ledger technology.

The Ministry of Finance and the exchange will work together to promote Astana Hub among local and international talent, allowing for the establishment of a regional blockchain hub.

“As a global leader among crypto exchanges, Binance takes responsibility for the whole ecosystem. Together with CZ, we considered the Binance roadmap in Kazakhstan. We also discussed the potential of creating a blockchain-oriented VC-fund and academy to help local talents from Astana Hub to go global. We really believe Kazakhstan can become a regional hub for international players in the crypto world.”

Minister of Digital Development, Innovation and Aerospace Industry of the Republic of Kazakhstan Bagdat Musin

In addition, the Ministry is involved in the formulation and implementation of state policy in the areas of innovation, communications, public services, and electronic industry in the context of the country’s digital development.

Kazakhstan to raise tax on crypto mining

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Kassym-Jomart Tokayev, the president of Kazakhstan, advocated for a higher tax on cryptocurrency mining merely weeks after a new charge went into force, local news outlets reported on Tuesday. He noted,

“It is necessary to identify all mining farms, check tax and customs issues, and at the same time carefully study the contracts on the basis of which the technical conditions were obtained, as well as other aspects of the activity. Please report by March 19.”

President Tokayev stated that the present rate of 1 Kazakh tenge ($0.0023) per kilowatt of power is insignificant, and he ordered the government to raise the tax as quickly as possible, as well as draw up a comprehensive proposal for crypto mining legislation by April 1. The tax took effect on 1 January 2022.

Reports stated that Crypto mining does not generate much employment and consumes a great deal of electricity, according to the president, who also noted that some miners pay less for power generation than the general population. Imported technology is also exempt from taxation.

Marat Sultangaziyev, Kazakhstan’s First Vice Minister of Finance, declared a rise in the mining rate of taxation from one to five tenge. In addition, the country would impose a special tariff on mining equipment, according to local media reports.

Sultangaziyev, speaking at the Ministry of Justice’s Interdepartmental Commission on Legislative Activities, said that under the deputies’ draught law “On Digital Assets in the Republic of Kazakhstan” and its accompanying amendments, significant tax agents will be established to pay the tax on mining, which will be data centers.

Kazakhstan attempts to close the income gap by raising tariffs on all minings

President Tokayev instructed his administration to increase tax income from the mining industry, which he claimed was benefiting from rising metal pricing.

In perspective, Kazakh’s president said,

“I am ordering the government to come up with a plan (to bring) additional revenues to the budget. In exchange we can provide large incentives for the exploration and development of new deposits for large mining and other companies.”

President Tokayev encouraged big corporations to contribute regularly to a new charitable organization, halted the wages of senior federal workers, and said the government must abolish monopolies and ensure fair competition, among other things.

However, Kazakhstan stands second in cryptocurrency mining, worldwide, according to media reports.

Bitcoin network power dips amidst Kazakhstan internet cutoff

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Bitcoin [BTC] network power plummets after the Kazakhstan administration imposed a nationwide internet shutdown following protests owing to a sudden sharp increase in its gas prices. It is to be noted that Kazakhstan became the world’s second-largest bitcoin mining center after the United States, as per a study conducted by Cambridge Centre for Alternative Finance, following China’s clampdown on crypto mining rigs in 2021.

The riots which began on 2nd January 2022 escalated leading to a sporadic internet shutdown after violence spread across the tightly controlled former Soviet state. The public ban on Wednesday prompted monitoring site Netblocks to term it as “a nation-scale internet blackout”. The move likely prevented Kazakhstan-based miners from accessing the bitcoin network.

In accordance with the most recent data available, Kazakhstan accounted for 18% of the global “hash rate” – crypto lingo for the amount of computing power required to mine BTC. In April last year, before China’s latest crackdown on bitcoin mining, the figure was just 8%. Kazakhstan’s crypto mining farms are mostly powered by aging coal plants that are causing a lot of concern for authorities as they seek to decarbonize the economy.

The Kazakh government said previously it planned to crack down first on unregistered “grey” miners which the government estimates might be consuming twice as much power in comparison to the “white” or the officially registered ones. Having said that, the decrease in the computational power has not reflected positively in Bitcoin price action.

Bitcoin 2022 off to a shaky start?

Bitcoin 2022 journey seems to start on the wrong foot. In addition to the Kazakhstan crisis that spurred a massive sell-off, the hawkish stance of the US Federal Reserve and the ongoing scare surrounding the Omicron variant of COVID-19, have all caused the dominant cryptocurrency to ‘trudge through the mud’ this week.

The price crash this week was triggered by a couple of factors. For instance, the US Federal Reserve’s December minutes raised the possibility of an interest rate hike as early as March. BTC trading activity as of January 4th, 2021 also took a hit due to a drop in enthusiasm. At press time, the king coin’s price is trading at $41,978 – nearly 40 percent down from its all-time high of $69,000, charted a couple of months last November.