From Kazakhstan to Uzbekistan: How Cryptocurrencies Are Regulated in Central Asia

As been reported on September 2, the president of Uzbekistan, Shavkat Mirziyoyev, ordered the establishment of a state blockchain development fund called the "Digital Trust." Earlier in September, a decree legalizing crypto trading — also making it tax-free — and mining in the country came into force, making Uzbekistan a crypto-friendly state. But how is the rest of the Central Asia region is holding up?The list below is based on thorough news research, but should in no way be considered complete. If you have more detailed information on banks and the crypto relationship in your country, we encourage you to share it in the comment section.

Kazakhstan
Kazakhstan

Regulation

Kazakhstan has clearly shown its interest in cryptocurrencies. According to a study published by the search engine Yandex in March, locals have been searching for crypto-related terms in frequency and the amount is several times higher this year as compared to 2017.

However, a definite regulatory framework has yet to be introduced in the country. There are signs that this situation might change in the near future, however: In May, Kazakhstan’s president, Nursultan Nazarbayev, called for global cooperation in terms of crypto regulation.

Nazarbayev stressed that “most countries are actively exploring the possibility of adapting cryptocurrency to the current configuration of financial systems,” adding:

“At the same time, we see completely separate actions of states in this issue. And these disparate actions will lead to inefficiency. It is necessary to start developing common rules.”

The president’s comment followed the National Bank of Kazakhstan’s (NBK) announcement that they are going to ban crypto trading and mining in the country. On March 30, CBK head Daniyar Akishev declared in an interview with RIA Novosti:

“In Kazakhstan, the National Bank is very conservative toward [cryptocurrencies], I welcome only relatively tight regulations. To elaborate, we want to prohibit buying and selling of cryptocurrencies with the national currency, we want to ban exchanges on this field, we want to ban any kind of mining.”

Akishev cited investor protection, Anti-Money Laundering (AML) and Know-Your-Customer (KYC) measures as primary reasons behind a potential blanket ban on cryptocurrencies. He added that NBK’s point of view is shared by “the majority of public authorities” in Kazakhstan and that his agency has already “prepared” amendments to the law.

Blockchain

Kazakhstan is actively trying to become the region’s main blockchain hub: In June, the country’s capital, Astana, held “the most important event for fintech in Central Asia” — a large blockchain conference supported by some public authorities and the Kazakh Association for Blockchain and cryptocurrencies (KABC).

KABC was registered in November 2017 by at least six organisations, some of which are led by people who previously worked at local regulating bodies. The coalition's chairman has previously stated that their primary goal is to “define the rules for crypto and blockchain’s market jointly with the watchdog.”

Some of the country's public authorities have already started researching crypto’s underlying technology. Thus, in April, the Ministry of Finance announced it was going to launch a blockchain-powered database, while a local cluster of innovation teamed up with IBM to study how the IT giant’s Hyperledger Fabric could be implemented for the local economy.