The Kazakhstan national parliament has passed a law that subjects crypto service providers to the country’s financial monitoring system. The law aims to protect investors and also prevent crypto-related crimes from happening.
According to a local report, the legislation mandates crypto platforms in the country to follow Anti-Money Laundering (AML) regulations. It is called the law “On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Counteracting the Legalization (Laundering) of Criminally Obtained Incomes and Financing of Terrorism.”
The legislation, which the Senate has approved, is currently awaiting President Kassym-Jomart Tokayev’s approval.
Senate Approves Legislation
The new legislation intends to improve on the current anti-money laundering framework. Thereby preventing the laundering of ill-gotten money and terrorism funding.
There is a critical focus on crypto platforms, especially with the rise of crypto-related crimes.
When a company launches or terminates any crypto-related service, it must notify Kazakhstan’s Ministry of Digital Development, Innovation, and Aerospace Industry. The Ministry will then conduct a risk assessment and also ensure that the company follows all stipulated regulations.
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The new law would also establish a legal institution of public officials. This would subject public figures and their family members to additional financial checks.
According to the report, Senator Olga Perepechina mentioned the need for this amendment.
“Today, persons issuing, organizing trading of digital assets, as well as providing services for the exchange of digital assets for cash, valuables and other property, are outside financial monitoring, which contributes to the spread of crimes in the field of money laundering and terrorist financing, including including the shadow economy, it stimulates malefactors, including terrorists, to use electronic assets in mutual settlements, ”the senator explained.
Total crypto market at $2.83 Trillion | Source: Crypto Total Market Cap from TradingView.com
Perepechina further mentioned that in June 2020, Kazakhstan adopted a law to regulate issuing and circulating digital assets. However, lawmakers now want to subject entities carrying out such activities to financial monitoring.
Additionally, the financial monitoring agency would have unrestricted access to the national register of business identification numbers.
This is necessary to establish transparency of information about the legal owner (direct or indirect) of the institution.
Crypto Regulation In Kazakhstan
The government of Kazakhstan legalized crypto mining in 2020. Since January this year, the crypto mining volume has more than doubled. In October 2021, the country’s current mining hash rate is second in the world after the United States.
Related Reading | How The U.S. Took The Leading Position In Bitcoin Mining From China
Within five years, Kazakhstan predicts that the crypto mining industry could contribute at least $1.5 billion to its economy. However, the limited power supply may hinder the industry’s growth.
Because of its low electricity rates, the Central Asian country has become a mining hotspot. The ongoing crackdown in China also contributes to this. Vice Minister of Energy Murat Zhurebekov has blamed the 7-percent increase in electricity consumption this year on illegal crypto miners.
Related Reading | Kazakhstan Is Emerging As A Significant Player In Crypto Mining
“Over the last 10 months, we have noted abnormal growth in energy consumption, which is approximately eight percent. We are talking about 1,000-1,200 megawatts of electricity. We associate such increase in consumption with increasing energy demand from miners,” he said.
President Tokayev also recently called for the urgent regulation of bitcoin mining in the country. In June 2021, he signed a law to introduce an additional charge of 1 tenge (US$0.0023) per kilowatt-hour for miners. The fee will be effective starting from Jan. 1, 2022.
Featured image from Waves Protocol, Chart from TradingView.com