The Republic of Kazakhstan is one of the world leaders in terms of mining. Now the authorities of this largest CIS country after Russia are introducing legislative regulation of the crypto industry. How much will it complicate the life of miners and other players in the crypto market?
Mining in Kazakhstan
For a long time, this Central Asian country was a place that attracted crypto enthusiasts. The country has formed a relatively favorable infrastructure for the production of cryptocurrencies. However, the situation began to change in early 2022, shortly after the ban on cryptocurrencies in China. Then, in January, riots broke out in Kazakhstan. A little later, the local government decided to seriously take up the legislative “crackdown”.
Before starting to describe in detail what and where you can do with cryptocurrency in Kazakhstan, let’s turn to how such a business interprets the law. Cryptocurrency in the republic is not money and does not have the status of a legal tender, but is recognized as property and a “digital asset”. What does it mean? For example, that to come anywhere and pay with the same bitcoin will not work. But there is no need to pay any separate tax on cryptocurrency. At least for now, until such a tax is introduced.
But mining is already taxed. In July 2022, President Kassym-Jomart Tokayev signed into law a law increasing fiscal pressure. It is understandable, Kazakhstan, according to various sources, ranked second or third in terms of mining in the world. Naturally, legislators considered it relevant to use this fact to fill the budget.
The tax period for mining tax is a quarter. Payment must be made no later than the 20th day of the month following the reporting quarter. For example, we are now in the first quarter of 2023. Therefore, the tax for it must be transferred to the budget no later than April 20, 2023.
The amount of the tax is determined as 1 tenge per 1 kilowatt-hour. At the same time, the maximum rate is 10 tenge per 1 kWh, provided that electricity is expensive, and the tariff for it is in the range of 5-10 tenge. For those who receive electricity from renewable sources, the rate may be reduced.
Since you have to pay a tax, then it must be collected, but how can this be done without registration? No way. Indeed, in Kazakhstan, by law, it is mandatory to register mining farms with the state. It is quite simple to do this: within a month, you notify the Information Security Committee of the Ministry of Digital Development, Innovation and Aerospace Industry of Kazakhstan in writing. In a statement you must specify details of the company, location of the farm, the capacity of the equipment used, the potential for expansion and how much you have invested in the project.
Well, as for adventurers (of course, there are also those) who mine in gray, it should be borne in mind that if they are found, then not only fines will follow, but also seizure of equipment.
You can trade, but not everywhere. If, for example, in Russia, any licensed bank provides access to the stock market, then in Kazakhstan, in order to carry out the activities of the exchange, you need to have
license Astana International Financial Center (AIFC). The first site to receive the green light in the country was Xignal. AIFC licenses are also held by ATAIX Eurasia, BITEEU Eurasia (in Kazakhstan itself better known like Intebix) and others. Recently, the world-famous exchange Binance has also acquired it.
That is, if you want to legally trade on Kazakhstani exchanges, they must have AIFC licenses. This does not mean that you will not be able to use the services of exchanges that have other jurisdictions. Marketplaces like Huobi, Bybit or KuCoin are also completely accessible. There you can buy cryptocurrencies for tenge. Each exchange has its own limit limits.
Have their own restrictions and exchanges licensed by the AIFC. Freely and without providing any clarifying data, you can buy cryptocurrencies for no more than $1,000 per month. If you confirm your income and your assets, then the maximum amount for which you can buy cryptocurrencies is $100,000.
Cryptocurrency exchangers in Kazakhstan
Here the situation is not much different from the exchanges. Crypto exchangers that operate on the territory of the republic must have an AIFC license. If not, then they are outside the law. It was precisely such enthusiasts who were recently covered by law enforcement officers in the north of the country.
“Crypto exchanges will not become legal. They are not legalized in any jurisdiction: neither in the national jurisdiction, nor in the jurisdiction of the AIFC. In the jurisdiction of the AIFC, in fact, only crypto-exchanges operate legally, and this is a completely different system, ”explains Ekaterina Smyshlyaeva, a former deputy of the lower house of the Parliament of Kazakhstan (Majilis).
In a nutshell: mining and trading in crypto-currencies are allowed in Kazakhstan. Crypto farms must be registered, and exchanges where trade takes place under the jurisdiction of Kazakhstan must have a license from a special state organization, the AIFC. Crypto exchanges, for the most part, are illegal.
This material and the information in it does not constitute individual or other investment advice. The opinion of the editors may not coincide with the opinions of the author, analytical portals and experts.
I am an experienced journalist, writer, and editor with a passion for finance and business news. I have been working in the journalism field for over 6 years, covering a variety of topics from finance to technology. As an author at World Stock Market, I specialize in finance business-related topics.