Kazakhstan may significantly change its status in the cryptocurrency field in Central Asia if proposed regulatory reforms are implemented. Initial steps are already underway.
Mining Growth and Energy Infrastructure Plans
Kazakhstan has become an important center for crypto mining since the crackdown on mining operations in China in 2021. Attracted by lower electricity prices and a favorable climate, many miners began relocating to Kazakhstan. However, this influx put pressure on the country's energy infrastructure, leading to electricity shortages. In response to these challenges, Kanysh Tuleushin, Kazakhstan's First Vice Minister of Digital Development, Innovation and Aerospace Industry, has proposed an innovative '70/30' model where 70% of the new energy capacity will be directed to the national grid and 30% for mining operations.
Regulatory Framework and AIFC Growth
A central element of Kazakhstan's strategy is the Astana International Financial Centre (AIFC), which was established in 2018 and has its own independent legal and regulatory framework. The AIFC has become a crucial hub for cryptocurrency activities in the country, with trading volumes on its platforms surging from $324 million in 2023 to $1.4 billion in 2024. Starting in 2025, miners will be required to sell 75% of their mined assets through AIFC platforms, enhancing the level of regulation in this area.
Regional Competition and Global Positioning
Kazakhstan also faces competition from neighboring countries striving for success in the crypto industry. Uzbekistan recently claimed the top position in the region for crypto adoption, implementing tax incentives for crypto transactions and licensing requirements. Unlike its neighbors, Kazakhstan focuses on regulated mining and developing the AIFC as a financial center, offering tax exemptions for crypto license holders until 2066.
Kazakhstan aims to take a leadership role in the cryptocurrency sphere of Central Asia by implementing new regulations and developing infrastructure, which could provide it with a competitive edge over neighboring countries.
