Kazakh Central Bank May Ban Cryptocurrency

The central bank of Kazakhstan is considering banning cryptocurrency, according to a report in Cryptovest.

Akishev Talgatovich, Governor of the Kazakh National Bank, told Russian news agency Sputnik that cryptocurrency is primarily used for illegal activity.

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“In Kazakhstan, the national bank is taking a very conservative approach toward the matter, and it welcomes nothing but extremely tough restrictions. Therefore, we want to ban the exchange of digital currencies for the national currency. We want to prohibit the stock exchange’s activities in this area, as well as every type of mining,” he said.

He added: “No central bank has all the instruments to control this market in the cross-border market. Therefore, at least, we must prevent this risk via the national currency.”

This is interesting because the central Asian country had appeared to be a relatively welcoming jurisdiction for cryptocurrency. It is the home of the Astana International Financial Center, which is a financial technology hub for “Central Asia, the Caucasus, EAEU, the Middle East, West China, Mongolia and Europe”, according to its official website. The AIFC is partnered with Ukrainian law firm Juscutum and Moscow-based company Kesarev Consulting.

In July 2017, it launched a working group to develop blockchain technology in CIS countries. A representative from Kesarev Consulting said at the time: “Kazakhstan became the second country in the world, after Japan, which recognized the need for the development of the cryptocurrency market system at the governmental level.”

The head of Juscutum added: “We consider this project as a perfect opportunity to create a new jurisdiction, which would be most favorable for crypto projects in the world. We are very pleased with the willingness of AIFC to embrace this new phenomenon; it gives hope for very quick results.”

In October, the organisation announced the launch of a cryptocurrency, beating Russia to the punch. “Blockchain and cryptocurrencies are entering the mainstream of today’s economic reality….We believe that the AIFC can become an international hub for blockchain operations and the development of the digital assets market is our key priority in the near future,” said Kairat Kelimbetov, AIFC Governor.

The difference in attitude could be explained by the fact that Talgatovich does not understand what a cryptocurrency is, by his own admission. At a press conference in Astana in October 2017 he said: “So far, I do not really understand what a cryptocurrency is, even considering the professional viewpoint. This is a tool that does not have an issuer, a single centralized authority, accordingly, most likely, is not backed by anything. And its value is based solely on speculative transactions. Therefore, nobody wants to guarantee the continued safety of those assets that people invest or want to invest in this kind of cryptocurrency.”