By Michael Scott
Kazakhstan is set to expand the scope of the recent crackdown targeting to reduce tax fraud and illegal crypto mining operations. In his address, President Kassym-Jomart Tokayev lauded the lawmakers’ input to eliminate unlawful mining operations while signing the bill into law.
President Tokayev indicated the law is timely to enable Kazakhstan to leverage the crypto activities among world leaders in Bitcoin mining hubs. The law signed on February 6 affirmed the firm’s stance on unlawful mining operations and fraudulent issuance of cryptos.
Legislation-backed Oversight to Curb Tax Evasion
The legislation obliges all digital assets issuance to comply with Kazakhstan’s government approval. The legislation obliges issuers of secured digital assets to comply with the legal provisions. The statement indicated that the Combating Laundering of Proceeds from Crime and Financing Terrorism law is set to be active on April 1, 2023.
The second legislation targets unsecured digital assets obtained via crypto mining operations. The legislation targets to curb tax evasion by obliging the crypto miners to sell a minimum of 75% of earnings through the Kazakhstan registered exchanges. This legislation mandates digital miners to furnish details regarding their income alongside the digital mining pools. The information collected would ease the taxation process for 12 months starting January 2024.
Time-based Licenses to Streamline Crypto Mining Taxation
The Kazakhstan regulatory revamped the issuance of crypto mining licenses, and each limited to 3 years. However, the licenses differ relative to the miner’s ownership rights to the mining facilities.
Besides introducing laws to curb tax evasion, Kazakhstan confirmed launching a pilot digital tenge – the country’s central bank digital currency (CBDC).
NBK-Binance Joint Research in Digital Assets
The National Bank of Kazakhstan recently issued a report that envisioned integrating DeFi and conventional finance. The report, co-authored by the crypto exchange Binance portrayed optimism in the successful collaborated project where DeFi would complement traditional finance.
The NBK deputy governor Berik Sholpankupov indicated that the jointly-published report marked the initiation of a practical research and development phase guiding Kazakhstan to explore the viability of CBDC. In particular, the practical exploration will prioritize assessing the viability of Digital Tenge bridging the crypto infrastructure and conventional fiat payments.
Earlier in October 2022, the country’s Astana Financial Services Authority (AFSA) announced the issuance of a permanent license to Binance. The license granted would facilitate Binance in managing digital assets and offering custodial crypto-related services.
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