Dear Readers,

Kazakhstan adopted a law1 On Digital Assets (hereinafter – the Law) to establish a legislative framework for the production and circulation of digital assets in Kazakhstan.

General Provisions

The Law introduces certain new digital technologies terms (such as digital miners, digital mining pool). Some of concepts used in the Law were previously introduced in the law On Informatization (such as a digital asset, a secured digital asset, and an unsecured digital asset). To avoid duplication and contradictions, such concepts were excluded from the law On Informatization.

To maintain the safety of the Kazakhstani financial system, secured and unsecured digital assets are not recognized as a means of payment, financial asset, or financial instrument in Kazakhstan.

Secured Digital Assets

Individual entrepreneurs and Kazakh legal entities may issue and trade secured digital assets on specialized digital platforms, subject to the state permission and confirmation of collateral. To prevent risks of negative impact on the financial system of Kazakhstan, money or securities cannot be used as collateral for such digital assets.

According to the Law, secured digital assets must contain information about the issuer and a record of the asset and/or property rights movement on the blockchain network. The state authorities will approve the list of permitted types of secured digital assets in Kazakhstan.

Taxpayers issuing or trading secured digital assets are included on the list of financial monitoring entities.

Digital Mining

A digital miner is an individual entrepreneur or a legal entity with a license for digital mining activities. Digital mining activities must be conducted through a digital mining pool using a digital mining data center.

There are two types of the license for digital mining activities that is issued for three years:

  1. To a digital miner owning a digital mining data center;
  2. To a digital miner who does not possess a digital mining data center but carries out digital mining using equipment located in someone’s digital mining data center.

Digital Mining Pool

A digital mining pool is a legal entity that provides a service of combining the capacities of digital miners' equipment for digital mining and distributes digital assets obtained as a result of their joint activity among the digital miners.

Digital mining pools are subject to the state accreditation. The mandatory prerequisites for the accreditation of a digital mining pool are the physical location of server capacities in Kazakhstan and compliance with the established information security requirements.

Digital mining activities and the distribution of digital assets by digital mining pools among digital miners are not related to the issuance and circulation of unsecured digital assets and may be carried out under general legislation of Kazakhstan.

Electricity Consumption by Miners

Electricity power legislation establishes the procedure for the purchase and consumption of electric power by digital miners. According to the established requirements, digital miners may purchase electric power within quotas approved by the Ministry of Energy from a limited number of sources, including renewable energy, imports, and the use of own generation.

Digital Asset Exchanges

The law prohibits the circulation of cryptocurrencies and the operation of crypto exchanges in Kazakhstan, with the exception of the jurisdiction of the Astana International Financial Center (AIFC). To support the local crypto exchanges, the Law introduced an obligation to exchange part of the sold cryptocurrency (at least 50% in 2024, at least 75% from 2025) mined in Kazakhstan through digital asset exchanges licensed by the AIFC.

The Law enters into force on 1 April 2023, except for the requirement to sell part of the digital assets through AIFC exchanges, which will take effect on 1 January 2024.

1 Law No. 193-VII of the Republic of Kazakhstan On Digital Assets in Kazakhstan, dated 6 February 2023