When China banned crypto mining earlier this year, Kazakhstan became the next major mining hub for miners. However, due to power outages, the country limited the access to electricity by Bitcoin miners.
However, with the growing adoption of mining also comes increased use of digital assets. Due to this growth, the country is now looking towards regulating virtual asset service providers.
Kazakhstan to regulate VASPs
Details from a local publication show that the proposed law seeks to regulate the operations of virtual asset service providers. According to Olga Perepechina, a member of parliament pushing for this bill, VASPs are the persons or firms that issue digital assets, facilitate trading and offer exchange services. She stated that the parties offering these services are currently not covered by the financial monitoring requirements.
Perepechina further noted that the lack of regulation in this area promotes financial crimes related to money laundering and terrorism financing.
Perepechina noted that on June 25, 2020, there was a law that called for the regulation of digital technologies. The law caters for the issuance and circulation of crypto assets in Kazakhstan and the AFIC.
However, the newly proposed law will now subject these firms or persons under the financial monitoring requirements. Under this law, VASPs will be required to report financial transactions to the relevant agencies.
This bill is yet to be passed into law, and it will only be implemented if it is signed by the country’s president, Kassym-Jomart Tokayev.
Kazakhstan leading in the crypto market
As aforementioned, Kazakhstan has become one of the largest crypto mining hubs. The country accounts for 18.1% of the global mining hashrate, making it the second-largest in Bitcoin mining after the US.
The other area where Kazakhstan is also making major gains is in crypto use and adoption. A few months ago, Kazakhstan allowed banking institutions to offer digital asset services to their clients. The government allowed banks to open accounts for clients transacting in Bitcoin and other altcoins.
The option to allow banks to offer digital asset services will only be available for one year, after which Kazakhstan will determine whether the service will be terminated or extended.
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