Kazakhstan allowing local banks to service crypto firms, under a year-long pilot program

In early June, the Central Bank of Kazakhstan (CBoK) announced that it would be allowing local banks and commercial banks to service cryptocurrency companies with their own risk appetite under a year-long pilot program. This week, CBoK announced that the full program has been launched.

In a move that both cryptocurrency enthusiasts and skeptics alike are excited about, Kazakhstan will be allowing local banks to service crypto exchanges and ICOs starting next year.

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Kazakhstan is allegedly enabling local banks to serve cryptocurrency companies as a result of Chinese miners being displaced as a result of a massive crackdown on cryptocurrency production in the nation.

Pilot Program of the AIFC

According to Kazakhstan’s Association of Blockchain and Data Center Industry, the government is working to enable banks to allow the general public and companies to trade cryptocurrency via their bank accounts.

Though the initiative’s scope may be expanded in the future, for the time being, only banks registered with AIFC [Astana International Financial Centre] will be permitted to participate in the pilot program. The goal of the program is to look at the benefits and drawbacks of cryptography. The banks participating in the initiative will be of the second tier, according to reports, although the list of participants has not yet been made public.

The government has chosen to conduct a crypto pilot program for many important reasons, according to a senior coordinator at AIFC. To begin with, the nation hosts about 6 to 8% of worldwide crypto mining; second, many big crypto companies have ceased operations in the country; and third, and probably most importantly, the possibility of widespread fraud.

The Program’s Foundations:

According to Sergey Putra, the worldwide presumption is that the crypto market volume is substantial. The daily volume is in the billions of dollars all around the globe. And even if Kazakhstan takes a fraction of a percent, or even one percent, of this volume, this is significant money that will come to Kazakhstan in the form of investments, taxes, jobs, and wages, and will stay here in the form of taxes, employment, and pay. This is a massive sector that Kazakhstan continues to overlook.

Chinese Miners Relocation:

Furthermore, AIFC Chairman Alan Dordzhiev disputed that Chinese miners had moved in large numbers to Kazakhstan, claiming that relocation is a complicated procedure in which miners must go through a lot of paperwork and that covid is a barrier.

Kazakhstan has a population of 16.3 million people, but because of it’s geographical location in the centre of Eurasia, it also has 2,000 miles of border with Russia. The country has extremely difficult weather conditions, with temperatures ranging from -20 degrees Celsius to 50 degrees Celsius. Not only that, it’s also one of the world’s poorest countries, which means that it needs to import most of its goods, including most of its food. The most notable example is IT, where the country imports around 90 percent of its technology goods.. Read more about blockchain government use cases pdf and let us know what you think.

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