Kazakhstani officials explain the reason for blocking Coinbase within the country
According to the Ministry of Culture and Information of Kazakhstan, the website of the second-largest global crypto exchange Coinbase has been blocked in the country due to violation of its national legislation.
«The Committee of Information under the Ministry of Culture and Information received a request from the Ministry of Digital Development, Innovations and Aerospace Industry of the Republic of Kazakhstan asking to block www.coinbase.com for violation of article 11, item 5 of the law on digital assets,» the ministry said in a statement.
Article 11, item 5 of the law on digital assets says that the issuing and turnover of unsecured digital assets are prohibited. The law also bans crypto exchanges from any activities associated with such assets outside the Astana International Financial Center (AIFC). So far, several crypto exchanges legally operate in Kazakhstan, including Binance, CaspianEx, Biteeu, ATAIX, Upbit, Xignal&MT and Bybit. The Astana Financial Services Authority (AFSA) is the one who gives permission to operate within the AIFC.
In this regard, the Ministry of Digital Development requested the Ministry of Information to block the website in Kazakhstan. Since the law on communications demands that providers block access to those websites with prohibited information, the Coinbase website has been blocked within the country’s territory.
Why has Kazakhstan unblocked Interactive Brokers and NYMEX?
Before Coinbase, Kazakhstan also blocked the websites of Interactive Brokers, one of the biggest global online brokers and NYMEX. At the time, the ministry said that it blocked these websites due to violation of the law on communications that demands that providers block websites with prohibited information.
The ministry also explained that in November 2022, the Agency for Regulation and Development of the Financial Market (ARDFM) included the website of Interactive Brokers in the cyber control database (Knadzor.kz) due to some signs of a Ponzi scheme and other fraudulent activities. The website of NYMEX was blocked because the platform provided access to trading with futures for bitcoins and Ethereum outside of the AIFC. However, when news about the websites of Interactive Brokers and NYMEX being blocked went public and sparked outrage among experts, access to these resources was fully restored.
«The Committee of Information received a letter from the the Financial Monitoring Agency with a request to restore access to the website. Based on this request the committee ordered to restore access to www.interactivebrokers.com in the territory of the Republic of Kazakhstan,» the Ministry of Information told Kursiv.
The ministry hasn’t explained the reason for restoring access to the NYMEX website. The exchange still supports trading with futures for bitcoins and Ethereum outside of the AIFC jurisdiction while AFSA hasn’t issued any permissions for that.
Any Kazakhstani or foreign company can obtain an AIFC license. They can offer their customers FinTech and RegTech services even before they meet all the regulatory requirements. In order to register a company, you have to file a preliminary application with a description of your project concept. If the application is approved, you have two months to send a final application. After that, the AFSA would review the company’s application for FinTech Lab membership.
The AFSA can also prepare requirements and conditions for FinTech activities if necessary. Once all requirements are met and the final approval is received, a company will be officially introduced to FinTech Lab.
Blocking foreign brokers and crypto exchanges
The Tenge (formerly known as FINANCE.kz) Telegram channel run by financial analyst Andrey Chebotarev was the first to notice the situation with blocked access to the websites on September 14. The media outlet also noted that the vast majority of websites of foreign brokers and crypto exchanges, including Interactive Brokers, who still open accounts for Kazakhstanis, are inaccessible in Kazakhstan without a VPN. Among other blocked resources are Freedom Securities Trading on Belize, Coinbase and Kraken.
Financier Rassul Rysmambetov described blocking access to the NYMEX and Interactive Brokers websites as a «big mistake.» Commenting on the situation to the KazTAG news agency, he said that technical specialists probably didn’t do any research and have blocked these websites along with some other resources they were asked to block.
Interactive Brokers is an American multinational brokerage firm. It operates the largest electronic trading platform in the United States by number of daily average revenue trades. The company is a subsidiary of Interactive Brokers Group, founded by Thomas Peterffy in 1978. The company is headquartered in Greenwich, Connecticut and has offices in four cities.
IB is regulated by the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, the New York Stock Exchange, the Commodity Futures Trading Commission, National Futures Association, Chicago Mercantile Exchange and other self-regulatory organizations.
As of 2021, the company served about two million institutional and retail customers, with $378.8 billion in customer equity. Since September 2021, IB customers have been able to trade with Bitcoin, Ethereum, Litecoin and Bitcoin Cash along with traded stocks, options, futures, bonds, mutual funds and exchange-traded funds.
NYMEX is an American commodity futures exchange established in 1882. So far, it is the biggest exchange in terms of trading with oil futures. The exchange also serves future contracts and transactions with options, exchange indexes, foreign currencies and goods.
