Fresh angle on cryptocurrency market: National Bank proposes “smart” regulation

Kazakhstan’s National Bank has presented its vision on the regulation of the crypto currency market and its integration into the national economy. In particular, the regulator suggests legally recognizing securities and real estate tokenization — the division and conversion of the assets into digital units. Additionally, the bank advocates for implementing «smart» market regulation.

The proposal followed the National Bank’s analysis of the situation on the global market of crypto assets, including digital financial assets, cryptocurrencies, stablecoins and other types of digital assets. After that, the regulator prepared its recommendations for crypto asset regulation based on current trends.

According to the National Bank, global efforts aimed at banning crypto assets are ineffective. According to its study, such prohibitions are incapable of preventing people from using cryptocurrencies. As a result, the regulator suggests developing a new crypto ecosystem on its own.

«One of the most promising areas in modern finance is the development of digital financial assets and tokenization of tangible assets such as real estate and securities. To achieve this, it is essential to establish a legal base for their use by creating an appropriate regulatory framework. This approach will open new opportunities for investors and companies,» the research highlighted.

The National Bank also advocates for balanced market regulation that not only minimizes risks but also facilitates the adoption of innovative technologies. According to the authors of the research, it is crucial to clearly define roles and responsibilities as well as to reinforce anti-money laundering (AML) measures and Know Your Customer (KYC) practices to ensure that cryptocurrencies are used only within a lawful legal framework.

«We recommend adopting ‘smart regulation’ principles that will address specific risks associated with cryptocurrencies while supporting their integration into the economy. It’s also essential to enhance the population’s financial intelligence and offer legal support to market participants, particularly investors and consumers, to reduce financial risks,» the National Bank added.

The regulator asserts that effective regulation will boost tax revenues, increase transparency in participants’ incomes, drive the development of new financial products and ultimately accelerate the country’s economic growth.

Kazakhstani legislation currently lacks a precise definition of digital assets. However, existing laws classify them as either secured (utility tokens) or unsecured (cryptocurrencies). Unsecured cryptocurrencies are permitted to be traded exclusively on exchanges registered with the Astana International Financial Centre (AIFC).

Last week, at the Congress of Financiers of Kazakhstan, the head of the National Bank Timur Suleimenov stated that «it’s time to allow citizens to invest in the cryptocurrency not exclusively through the exchanges within the AIFC.» Currently, 11 crypto exchanges are licensed to operate in Kazakhstan. According to the official, the market liberalization is coming. Once it happens, crypto exchange may be allowed in the country, as well as transactions in cryptocurrency within the general jurisdiction.