Kazakhstan establishing national crypto reserve
Kazinform, the state-owned official news agency of Kazakhstan, has reported that the central Asian republic is working towards the establishment of a national crypto reserve.
The news agency revealed that in answering an inquiry from a member of the Kazakhstan parliament, Timur Suleimenov, Governor of the National Bank of Kazakhstan, said that the central bank is currently studying information related to the formation and management of a national crypto reserve.
Following best international practice
Plans are being devised for a crypto reserve on the basis that best international practice as applied to sovereign wealth fund management is adopted. In this respect, guidelines related to transparency of accounting and secure crypto custody will be followed.
The reserve will be established through an affiliate entity of Kazakhstan's central bank, specializing in alternative investments. In responding to the parliamentary inquiry, Suleimenov also revealed the likely source of funding for the fund. He stated:
“International practice shows that the sources for such a reserve may include confiscated crypto-assets, as well as cryptocurrencies mined by a crypto miner partially owned by the government.”
Suleimenov outlined that while crypto assets have proven to be volatile and riskier than other asset classes, having the reserve controlled and managed by a central bank affiliate would result in the required levels of risk management and overall oversight being applied.
According to Kursiv, a news organization focused on the Central Asian region, the authorities in Kazakhstan plan to amend relevant legislation so as to enable the effective management of the crypto reserve. Suleimenov stated that the central bank is open to discussing potential legislative amendments with members of Kazakhstan's parliament.
The National Bank of Kazakhstan's governor also warned that misinformation by pseudo-business coaches related to cryptocurrencies needs to be curbed. He feels that in order to protect investors, and particularly young people, legal measures will be necessary in an effort to bring about greater transparency within the country’s crypto market.
The authorities in Kazakhstan currently have a crypto regulatory framework in place that requires crypto trading platforms that extend their services to local users to have acquired a trading license from the Astana International Financial Centre (AIFC).
In May, it emerged that the Central Asian republic is planning to establish a pilot project for cryptocurrencies called “CryptoCity.” At the time, Kazakhstan’s president, Kassym-Jomart Tokayev, delivered a speech at the Astana International Forum outlining that the CryptoCity project would facilitate the use of crypto for the payment of goods and services within a specific geographical zone.
Crypto hub potential
Earlier that month, the country’s First Vice-Minister of Digital Development, Innovation and Aerospace Industry, Kanysh Tuleushin, said that Kazakhstan had the potential to emerge as a leading cryptocurrency hub within the Central Asian region.
Following the implementation of a ban on crypto mining in China in 2021, Kazakhstan experienced an influx of miners, attracted by cheap electricity. However, the arrival of miners was unplanned for, putting extreme pressure on the local electricity grid, resulting ultimately in brownouts and protests.
The country once accounted for 27% of global Bitcoin mining. However, regulations introduced in 2023 led to the activity being scaled back considerably.
