Here’s how Kazakhstan aims to enhance its legacy crypto trading framework

The Astana Financial Services Authority, a Kazakh regulator, pointed out that the existing framework dates back to 2018 while proposing certain enhancements.

Kazakhstan, one of the world’s biggest Bitcoin (BTC) mining destinations, issued a consultation paper to gauge public interest in proposed amendments to improve the cryptocurrency trading framework.

The policy paper, released on Jan. 27, was laid down by the Astana Financial Services Authority (AFSA), a Kazakh regulator. The AFSA pointed out that the Astana International Financial Centre’s Digital Asset Trading Facility (DATF) regulatory framework dates back to 2018 and that the amendments seek to introduce certain enhancements.

AFSA’s analysis highlighted problems related to the ongoing supervision of crypto exchanges, revealing “contradictions, inefficient provisions and uncertain definitions within the regime.” It recommended introducing risk mitigation measures around several fronts, including governance, illicit activity, safekeeping of clients’ funds and settlement.

Regarding DATF framework restructuring, the paper recommended three options — keeping the existing framework form, developing a standalone DATF framework and treating crypto exchanges as a multilateral trading facility.

The AFSA believes that the policy recommendations will bring about several improvements, including risk mitigation related to crypto operations and the industry in general. In addition, the enhancements will address contradictions and unclear provisions of the existing framework. The final outcome, expected by AFSA, is to create a favorable regime for crypto exchanges while encouraging innovation.

According to the policy paper, the proposed measures will have a positive impact on crypto trading industry:

“This will collectively help to create more a clear, convenient, efficient, detailed and balanced AIFC DATF framework with high standards for consumer protection, without hindering development of crypto exchanges.”

On an end note, the paper revealed that the review of the DATF framework aligns with the “AFSA’s Strategy for 2022” initiative, where the development of “Digital Assets framework: Crypto exchanges, STO and DASP” is one of three key regulations development objectives.

On the other end of the spectrum, Kazakhstan’s central bank recommended launching an in-house central bank digital currency (CBDC) in 2023, with a phased expansion of functionality and introduction into commercial operation until the end of 2025.

In October 2022, Binance CEO Changpeng “CZ” Zhao revealed that Kazakhstan’s CBDC would be integrated with BNB Chain, a blockchain built by the crypto exchange.