Cryptocurrency in Kazakhstan – features of the legal status and prospects

Cryptocurrencies confidently occupy one of the leading positions in the financial world, so many countries are actively solving them legal issue. Including in Kazakhstan, where in 2020, the law on digital assets came into force. Cryptocurrencies were recognized as property, however them use as a means of payment in the country is not allowed. Read more about the rules and prospects for using cryptocurrency in Kazakhstan in our article.

Details of the legal status of cryptocurrency in Kazakhstan

The Law “On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on the Regulation of Digital Technologies” has become the first step in the organization of legal norms in relation to digital assets. This document separates the regulation of mining, issuance and circulation of cryptocurrency. It implies the use of two approaches, namely general regulation and regulation from the Astana International Financial Center (AIFC).

General regulation

Kazakhstan recognizes cryptocurrency in the form of a digital asset, which is a means of payment in the country, falling under the status of property. However, there is a clear division into secured and unsecured assets. In accordance with this, the government announced that “the issuance and circulation of unsecured digital assets in the territory of the Republic of Kazakhstan is prohibited, except as provided by the laws of the Republic of Kazakhstan.” But at the same time, it is possible to open accounts with foreign brokers and take part in the turnover of assets of this type.

Secured are those tokens that are defined at the legislative level as a means of exchange, accounting and certification of property rights. This applies to stablecoins that are pegged to gold, the dollar or securities.

At the same time, there is no ban on mining unsecured assets. However, their production on a large scale in the country is difficult, because legally such a digital asset belongs to the miner. The right to own a cryptocurrency must be confirmed by a record in the blockchain by the person who issues this asset. Having organized the extraction of the crypt, the miner will have to inform the relevant authorities about this.

The taxation of such assets will be based on the existing accounting standards in the country. Based on the fact that the cryptocurrency is recognized as property, it will be treated as reserves. Thus, there is no special taxation for crypto in Kazakhstan. The amount of tax required to pay will depend on the total income for the tax period.

Additionally, you need to take into account the mining tax introduced in 2022. When mining coins, it became necessary to pay extra 1 tenge for each kilowatt of electricity. One mining rig can no longer exceed 1 megawatt, and the total power of all equipment is 100 megawatts. In the near future, a significant increase in the electricity tax for miners is planned.

AIFC regulation

It is legally allowed to regulate the circulation and mining of digital assets by those acts that are issued directly by the AIFC. In particular, there is no division into secured and unsecured assets in the Center, the names “mining” or “turnover” of cryptocurrencies are not used. Due to the absence of such terms, there is no ban on activities with virtual assets. To do this, the AIFC used the general rules of English law, which allows you to carry out activities that are not prohibited by law.

Where to buy cryptocurrency in Kazakhstan?

Against the backdrop of the general hype in the direction of cryptocurrencies, many are looking for ways to invest safely, that is, buying a certain amount of coins. This can be done with:

• Cryptocurrency exchanges. A sufficient number of reliable platforms officially operate in the country, both large and small. In the case of a purchase, it is recommended not to store all the coins on the exchange, but to create a non-custodial wallet.
• Crypto exchanges. With their help, you can change fiat to various coins. Before making a transaction, you need to familiarize yourself with the conditions (commissions, limits).
• Crypto wallets. There is a wide variety of wallets on which you can store digital money. The choice should be made based on the purpose of the acquisition, the retention period, the assets of interest (for example, rare altcoins), the willingness to additionally invest in hardware wallets, etc.
• Cryptomats. These are special devices that work on the principle of an ATM. Today, there are three such devices in Kazakhstan.

What are the prospects for the development of the cryptocurrency sphere?

Despite the high risks and significant volatility of the cryptocurrency, it still remains in demand and relevant. And its returns outperform traditional assets such as precious metals and gold. In some countries, for example, in El Salvador, the crypt has become a means of payment on a par with the state currency.

Today, cryptocurrency in Kazakhstan is rapidly developing: both in terms of its use by citizens, and in the field of legislative regulation. The field of mining and the legal registration of companies engaged in the extraction of virtual assets are also expanding – a registry is provided for them, the possibility of registering income and paying taxes. It is likely that in the future it will be easier for crypto-entrepreneurs to legalize their activities than to work “in the gray”.

Disclaimer. Investing in any financial asset carries the risk of losing capital. Nothing in this text can be considered an investment recommendation or an offer to buy/sell any financial instruments. For all their actions in the stock market, each investor bears full responsibility independently.