Kazakhstan Tightens Crypto Regulations, Blocking Coinbase Amid Legal Concerns

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Published: November 07, 2023 at 9:51 pm Updated: November 07, 2023 at 9:52 pm

Edited and fact-checked:
November 07, 2023 at 9:51 pm

In Brief

The Kazakh government has blocked Coinbase, accusing it of violating the Digital Assets Law by issuing and trading digital currencies and conducting cryptocurrency exchange operations without state permission.

Kazakhstan’s Ministry of Culture and Information has confirmed the blockage of Coinbase’s website within its jurisdiction, citing a breach of the national Digital Assets Law. The move has sparked discussions about the country’s regulatory environment for cryptocurrencies and digital exchanges.

The Ministry’s Information Committee acted upon a request from the Ministry of Digital Development, Innovation, and Aerospace Industry, asserting that Coinbase’s operations violated specific clauses of the law, particularly those prohibiting unsecured digital assets and crypto exchange activities without state authorization.

While Coinbase is the most recent to face restrictions, it isn’t the only entity to encounter regulatory hurdles. Interactive Brokers and the New York Mercantile Exchange (NYMEX) also faced temporary blockages, with allegations of facilitating financial pyramid schemes and offering cryptocurrency futures trading outside the purview of the Astana International Financial Center (AIFC).

The blockages, however, were lifted following communications from Kazakhstan’s Financial Monitoring Agency, demonstrating the country’s nuanced approach to regulating international financial service providers and crypto exchanges.

Kazakhstan Regulatory Landscape

The regulatory landscape in Kazakhstan provides pathways for companies to operate within the AIFC, which requires a license from the Astana Financial Services Regulatory Committee (AFSA). The AFSA offers a regulatory sandbox for FinTech and RegTech services, allowing companies to operate without immediate full compliance, given that they submit a preliminary and then a complete application for project development.

The current regulatory climate has led to discussions among financial analysts in Kazakhstan, with some like Rasul Rysmambetov labeling the blockages as oversights by technical specialists. Others see it as a sign of the government’s intention to create a secure and controlled financial environment that mitigates risks associated with the crypto market.

Interactive Brokers, a prominent American brokerage firm, and other foreign brokers and crypto exchanges remain operational for Kazakhstanis, albeit with the need for VPNs to access some websites.

The unfolding situation illustrates Kazakhstan’s cautious yet proactive stance in shaping its digital asset regulatory framework. The country seeks to balance innovation with financial security as it navigates the complexities of the global cryptocurrency landscape.

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Nik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master’s degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.

Nik Asti