Legislative Trends And Innovations In Digital Assets

• Published date: 17 January 2024
• Subject Matter: Technology, Fin Tech
• Law Firm: Unicase Law Firm
• Author: Mr Sanzhar Amangeldy and Sabina Semyatova

In light of the global wide spreading and active use of cryptocurrencies, referred to as "digital assets", local (Kazakhstan) legislator acknowledges that introducing effective legal frameworks is essential. Adopting the Law on Digital Assets¹marked a pivotal milestone, prompting the development of supplementary legal acts to delineate implementation procedures. Kazakhstan is committed to fostering a business-friendly environment, aligning with a strategic goal of enhancing competitiveness among other states.

Kazakhstan has implemented comprehensive regulations for digital assets, focusing on AML/CFT measures, permitting processes, and detailed guidelines for stakeholders. These efforts aim to create a secure environment, classify clients, and set strict standards encouraging accountable participation in the digital asset industry.

Financial monitoring and AML/CFT

The AML/CFT Regulations for digital asset activities have been specifically approved as part of the Anti-Money Laundering measures². Those involved in digital asset activities, including clients and related transactions, are subject to financial monitoring.³

Key indicators have been established to prevent criminal use of digital assets, such as depositing assets with an exchange and promptly excluding them, exchanging assets for fiat currency at a loss, and using funds from unregistered or improperly licensed cryptocurrency exchanges⁴.

Notably, violations of these AML/CFT requirements incur liability under the Code on Administrative Offences⁵ and Criminal Code⁶.

Permit for the Issuing and Circulating of Secured Digital Assets

Under Kazakhstani legislation, acquiring a permit is mandatory for issuing and circulating secured digital assets. This permit, outlined by the Permission Rules⁷, requires individuals or legal entities to apply to the Electronic Licensing platform of the Republic of Kazakhstan (elicense.kz ).

Applicants shall possess requisite server equipment (at least 5 blockchain network nodes), an algorithm for node record verification, and documentation substantiating copyright ownership.

The Permit is granted for three years.

Provision of Information

To facilitate government inspections and preventive measures, state authorities have developed checklists for various entrepreneurial activities, including those related to digital assets, which have been integrated into the Entrepreneur Code⁸. These checklists have received approval for miners⁹ and individuals engaged in issuing and...