The Majlis has given its stamp of approval to the first reading of a proposed bill that would establish a legislative framework in Kazakhstan for the generation of digital assets as well as their circulation inside the country. As a result of a request made by President Kassym-Jomart Tokayev, the draft legislation and the accompanying supporting documents were recently drafted and given to the lower house of the country’s parliament.
The creation of regulations for the functioning of a new kind of financial institution in Kazakhstan, known as approved cryptocurrency exchanges, is one of the primary goals of the legislation that was recently passed. Starting in 2024, the government intends to implement a policy that would require cryptocurrency miners to swap as much as 75% of their revenues in order to fund these trading platforms.
In addition to this, the authorities want mining pools to pay taxes on their earnings, and they want exchanges to pay fees. The proponents of this law also have the intention of levying a corporation tax on crypto-related businesses. At the moment, mining companies are only obligated to pay taxes on the electricity that they use. The amount of tax that must be paid is determined by the amount of energy that must be used to transport the digital currency.
When China began to tighten down on the mining industry in 2021, Kazakhstan was able to attract several mining companies because of its cheap power prices. The sudden rush of miners, however, created power disruptions and contributed to the crumbling of the country’s ageing infrastructure, both of which resulted in the shutdown of cryptocurrency farms. The Central Asian republic was compelled to levy taxes and purchase power from its neighbour, the Russian Federation.
According to Ekaterina Smysliyeva, a member of the Majlis Committee for Economic Reform and Regional Development, one of the major motivations for the sponsors of the draught law is the establishment of a legal mechanism to regulate the use of electricity in the region. This is an additional major motive for the sponsors of the draught law. In addition to this, he stated that the Ministry of Power would be establishing energy quotas for mining operations in order to keep the energy supply system of the country in a state of equilibrium.
According to the member of parliament, Kazakhstan is being utilised as a “raw material appendage of the blockchain sector,” as stated in the report that was published by the Russian news site RBC Crypto. However, things are set to change as a result of the implementation of a new licensing system for cryptocurrency miners, which will replace the present system of voluntary registration. Those that are interested in mining will, as a result, be required to organise themselves into legal businesses and pay the appropriate taxes.
“The law establishes a connection between the creation of digital assets and their subsequent circulation across an ecosystem. Ekaterina Smyshlyava adds that at the same time, the operations of miners and mining pools will be controlled and licenced by the Ministry of Digital Development, Innovation, and Aerospace Industry.